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DEAUVILLE, France: Alexei Miller, the head of Russian
energy giant Gazprom, warned on Tuesday that the price of oil is
likely to hit $250 a barrel, without saying when the surge would
come.
“Today, we are witnessing a
critical increase in the price of hydrocarbons,” Miller told
journalists during a meeting of the European Business Congress.
“Now, the price is going to
reach a level never-before-seen. The perspective will be $250 per
barrel of oil and the competition for this resource will be
strong.”
Miller said that while
speculation had played a role in oil prices, “this influence was
not decisive.”
In Kuala Lumpur, oil experts also
on Tuesday tipped crude oil prices to surge to $150 a barrel in the
next two months, citing factors including strong demand and
speculation by commodities traders.
Industry figures at the annual
Asia Oil and Gas Conference also said prices could escalate to $180
to $200 a barrel in the next four years.
“It will go to $150 a barrel in
the short-term,” Fereidun Fesharaki, chairman of oil consultancy
Facts Global Energy, said on the sidelines of the two-day
conference.
“Fundamentally, it can go to
$180 to $200 a barrel by 2012 and 2013,” he added. While high
prices have impacted on demand growth, according to Fereidun, new
players have emerged.
“Demand in the US and many key
Asian countries has stopped growing,” he said in a conference
paper. “China, India and the Middle East countries have locked in
a demand growth of some one million barrels per day.”
Fereidun, the conference
chairman, said price increases in the past two to three months
“are all due to huge inflows of speculative money.”
Latest developments
Crude oil costs rose in Asia on
Tuesday despite a call by the world’s leading producer, Saudi
Arabia, for talks with consumer nations on soaring prices.
New York’s main oil futures
contract, light sweet crude for July delivery, gained 63 cents to
$134.98 a barrel. The contract slid $4.19 a barrel to close at
134.35 Monday at the New York Mercantile Exchange.
On Friday, the two benchmark
crude oil futures contracts hit all-time highs of 139.12 in New York
and 138.12 in London.
John Sallee, managing director of
clean energy firm World-GTL Inc., said a lack of major oil
discoveries and shortage of refinery capacity were pushing oil
prices up.
“There is a lot of loose talk
of speculation. It is an easy thing to blame. I think the increases
in price are due to fundamental issues. There is more oil being
consumed and less oil being discovered,” he added.
Sallee said crude oil could hit
$150 a barrel in the next one or two months. “In the long run, it
will go higher.”
Yutaka Kunigo, Japan-based
executive officer with Tokyo Gas, described prevailing high crude
oil prices as “crazy.”
“It does not reflect the supply
and demand situation. I think speculation by commodities traders is
the main reason,” he said.
Cut fuel subsidies
Also in France, the International
Energy Agency (IEA) forecast also on Tuesday that high global oil
prices and cuts in fuel subsidies will slow growth of oil demand
this year. It also reported a supply surge of half a million barrels
per day in May.
The energy agency, the oil market
watchdog for industrialized countries, also sent a strong message to
reassure markets that it would release strategic oil stocks if
supplies were disrupted by tension, or an eventual attack, over
Iran’s nuclear program.
The price surge last week to
about $140 a barrel, however, “is not just about geopolitical
risks—the supply situation remains tight,” the watchdog said,
signaling it was uncertain about how supply and demand will play out
in the next six months.
Some market analysts suggest that
the $140 price was a bubble that could burst, and on Tuesday the
price was down to $133.94 a barrel.
The agency predicted that
overall, market conditions “may ease” in the next few months,
although they were “unlikely” to mark the end of current market
tensions because underlying high prices “are largely explained by
fundamentals.”
Already in the industrialized
nations of the Organization for Economic Cooperation and
Development, or OECD, “oil demand . . . is falling,” the
watchdog found.
High oil prices were changing
consumer behavior in OECD members “but they will take time to
filter through.”
Airlines were cutting flights and
consumers were turning away from SUVs to fuel-efficient cars and to
public transportation.
Worst possible response
Overall use of vehicles was
falling and consumers were protesting, the IEA said, but also warned
that “absolutely the worst response is to subsidize prices more,
or in the case of the OECD, to cut taxes.”
It said it hoped to have a
clearer picture of short- and medium-term trends when it publishes
its medium-term oil market report early next month.
Commenting on a record surge of
$10.75 in the oil price on Friday, the energy agency noted in its
monthly report that this followed comments by an Israeli minister
that an attack on Iran was “inevitable” if Iran continued its
nuclear enrichment program.
Acknowledging that the price leap
on Friday had been driven partly by speculators, it said the sudden
rise was more a reflection of “risk management rather than
speculation.”
And commenting on possible
threats to supplies because of tension over Iran, the agency added:
“There is also another supply response to consider: strategic
stock release by the oil watchdog.
On the overall state of the
market, the watchdog said it now expected global demand for oil to
average 86.8 million barrels a day this year, or 80,000 barrels a
day below its estimate last month. The downward revision took
account of “the reduction of price subsidies in several non-OECD
countries.”
When allowance was made for
previous upgrades of how much oil had been consumed in the last two
years, the cut in forecast growth of demand this year was nearly
three times higher at 230,000 barrels a day.
This figure put growth in demand
this year, from the 2007 level, at 800,000 barrels a day or 0.9
percent.
--AFP
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