Building a world of
resilient communities.

MAIN LIST

 

Deutsche warns oil price may hit $100

OIL prices could potentially hit $100 per barrel, analysts at Deutsche Bank warned yesterday - as the cost of US light crude hit a 21-year record of almost $44.

Adam Sieminski, Deutsche’s global energy strategist, claimed that oil supplies have become so tight in recent weeks that a serious disruption in the Middle East could send prices rocketing to unprecedented heights.

He said: "It is worth asking ourselves - ‘what would happen tomorrow if we lost four million barrels a day, due to some accident?’ Or let’s say Iraq’s two million barrels a day became unavailable. OPEC’s got no spare capacity. And that could be it - $100 per barrel."

Sieminski stressed that this was not a wild claim. "The last time OPEC was at 95-100 per cent capacity was in 1973-74, and again around 1980. And disruptions put prices up by 50 to 100 per cent.

"We’re at $40 already, so a repeat gives you $60-$80 per barrel." Two separate instances of disruption, on this logic, could take the price up a further step to $100.

Benchmark US light crude came within a whisker of $44 yesterday, touching $43.92 at its peak. The price sank back to $43.50 by late evening.

The spike came after the US raised its security alert to "high", citing a possible al-Qaeda attack on financial institutions. The announcement was made on Sunday, but yesterday was the first chance for markets to react.

Separately, Russian oil giant Yukos was told by Moscow it will begin investigating the company’s tax payments from 2002 - earlier than before, and a move that could add to its already massive bill.

The news was softened by an announcement from the Russian energy ministry that oil output in the country hit a new post-Soviet high of 9.33 million barrels per day in July. Brent crude, which rose above $40 to a fresh 14-year high of $40.05 on Friday, sank 20 cents to $39.85.

Sieminski said: "Most of the analysts who look at the fundamentals of supply and demand will tell you we’re now at the top [of the oil price]. But as long as the incremental supplies continue to come from countries where availability is an issue, the potential for prices to stay high is, itself, very high."

Market fears will calm down if sabotage or other disruptions do not emerge, and this could see $5 a barrel come out of the price by the end of the year, he estimated.

"But, fundamentally, we’ve got to slow down demand growth. And, historically, the only way to make a lot of progress with that is a recession. So if you’re worried about the oil price perhaps you’ve got to ask, which do you prefer?"

What do you think? Leave a comment below.

Sign up for regular Resilience bulletins direct to your email.

Take action!  

Make connections via our GROUPS page.
Start your own projects. See our RESOURCES page.
Help build resilience. DONATE NOW.

Tags:  

Divest! - Then What?

Divestment is one of the great campaigns of our times.But the question then …

World Oil Production at 3/31/2014-Where are We Headed?

The standard way to make forecasts of almost anything is to look at recent …

Peak oil notes - July 24

A midweek update. New York crude futures have traded in a narrow range …

Onshore Wind Power Is Now Cheapest Form Of New Electricity In Denmark

A new analysis from the government of Denmark found that wind power is by …

Keeping Oil Production From Falling

Production flows from a given oil field naturally decline over time, but we …

Oil Abundance? Not So Fast- A Risk Checklist

Understanding how we use oil and where it comes from provides many reasons …

Peak Oil Review - July 21

A weekly review including: Oil and the Global Economy, The Middle East & …