Neocon-led aggression upon Iran would cause prices to skyrocket
News article filed by BNP news team
A news report from Kuala Lumpur is carrying a statement from the boss of one of the world’s leading oil companies in which he states that oil prices may skyrocket to US$70-US$80 (RM210-240) per barrel in the medium term if countries do not stop the continued increase in consumption, an official of the Emirates National Oil Co Ltd said. Crude is trading on the New York markets for around $65 a barrel this afternoon (Tuesday 12th June).
Hussain Sultan, ENOC’s group chief executive, said that as a result, “world economies will once again seriously have to do their sums again” as the “world is not very comfortable with oil being at around US$60-US$70 per barrel.”
With the Organisation of Oil Exporting Countries (OPEC) facing a decline in production capacities, the world cannot afford to keep consuming oil at increasing levels, he said in his paper on “Changing Horizons of Oil – the ENOC Experience” at the 12th Asia Oil and Gas Conference 2007 in Malaysia.He said that Goldman Sachs’ prediction two years ago that prices would soon touch US$100 per barrel did not come true mainly because under the present conditions, “that level is not sustainable.”
He also expressed concern with the rapid expansion in the economies of China and India where between them, the world will need an additional five million barrels per day by 2010 over today’s consumption.
“We live in a commoditised world and increasingly, oil is not a standalone commodity,” he said.
Therefore, the price of oil depends not only on traditional influencing factors such as demand and supply, weather, specification and geopolitics, but increasingly on the interplay of the impact of commodities such as metals, foreign exchange rates and even agricultural produce.
He said the impact on the prices due to the participation of large non-oil players in the oil markets such as mutual and hedge funds further complicates the issues and makes pricing of oil more and more of a non-oil influenced commodity.
Iranian echo
The $80 a barrel marker was also predicted by a senior Iranian official said yesterday.
“The $80 price is a maximum forecast for oil in the current year but the average price of oil in the current year will be $66.20,” said Mohammad Ali Khatibi, deputy director for international affairs of the National Iranian Oil Co. (NIOC).
Meanwhile, another Iranian official warned oil would hit $250 a barrel if U.S. forces were to launch an assault on the nation over its nuclear program, pushing Tehran to attack U.S. interests in the Persian Gulf.
Khatibi said storms, like Cyclone Gonu that lashed the south of Iran and disrupted oil exports from nearby Oman last week, could help drive the price to around $80 a barrel – although he did not specify which benchmark crude he was referring to.
“Based on forecasts, within the next three months … the increase in gasoline consumption, seasonal storms and problems in Nigeria’s oil supply will cause the price of oil to seriously increase,” he was quoted as saying.
“This will raise concerns with consumer countries.”
A long-running row between Iran, the second-largest OPEC oil exporter, and the West over Tehran’s nuclear program has also helped prop up prices, traders say. The West accuses Iran of seeking nuclear weapons, a charge Tehran denies. Khatibi did not mention the dispute as a supporting factor.
The impact of higher oil prices will be found not just in higher pump prices for petrol and diesel but every consumer good transported by plane, ship, truck or railway. A timely reminder that the UK needs to develop its own energy strategy which reduces our reliance on imported finite fossil fuels from unstable regimes and provides energy security, employment for our people and reduces our carbon emissions.
More in-depth information about Peak Oil can be found on our web site http://www.bnp.org.uk/peakoil/index.htm.