Forecast demand decrease will push oil price down to $80 per barrel: Kuwaiti expert

January, 01st 2014

Kuwait City: Oil prices are forecast to range between $80 per barrel and $90 per barrel, largely due to fall of demand as compared to supplies.

Oil expert Khaled Boudai told KUNA in an interview that the predicted decrease of the crude price would be as a result of fall of supplies of Iranian, Iraqi and Libyan oil, with the international economic blockade on Iran is forecast to ease off, Iraqi crude output would climb and Libyan crude exports would resume.

Forecast rise of the oil supplies, in 2014, will range between 1.5 to two million barrels per day (bpd), thus a market glut is foreseen, simultaneously with prices’ fall.

In case supplies decreased by more than one million bpd, the Brent oil price would be in the range of $90-100 per barrel, he said, adding that shale oil would not significantly affect the prices.

Wide-scale output of shale oil is ruled out, said Boudai in the remarks to KUNA, also noting that cost of extraction of this type of oil is too high, $80-70 per barrel.

Nevertheless, shale oil may develop greater influence on the market in five years’ time, with development of exploration and drilling technology, he said, adding that producers of this non-conventional crude aspire to limit the output cost to $40 per barrel to make this industry much more feasible.

Boudai cautioned that the oil prices might jump higher than forecast if unpredictable dramatic events take place on the Middle East theatre.

As to the 2013 prices, Boudai said the Brent crude price had been forecast to reach $95-105 per barrel, however it jumped higher by $5.

Asked about the US success in increasing shale oil production, last year, by up to one million bpd, he acknowledged that the Americans did succeed in trimming dependence on oil exports, “however this was offset with demand hike in other parts of the world and that contributed to making the prices close the year with rise.”

Shale oil won’t be influential on the crude market unless the producers succeed in trimming the cost of production to $40 per barrel, he affirmed, adding that its role would be minimal in case prices of the conventional oil drop.

For now, shale oil is benefiting from the high prices of the conventional oil, standing at $90 per barrel, he added.

Source: Gulfnews.com