Oil price likely to drop to $60 per barrel- Former IPE director

Oil price likely to drop to $60 per barrel- Former IPE director

Tehran, Iran, Nov. 2
By Milad Fashtami - Trend:

Former director of International Petroleum Exchange believes that the falling trend of oil price will continue until reaching $60 to $70 per barrel.

OPEC oil basket price dropped from $107 in late June to about $82 per a barrel this week, while West Texas Intermediate (WTI) was sold at a little more than $80 per a barrel.
In total, oil crude price has experienced a 25 percent drop during last four months.
Former director of International Petroleum Exchange Chris Cook blames this sudden drop in global prices, which he has been expecting for some time, on a combination of a flush of new high cost oil supply, and a substantial reduction in both physical and financial demand for oil.

He told Trend on Nov.2 that in every commodity market there are essentially two limiting price levels or boundaries. There is the "buyer's market" price when the market is over-supplied, and there is the higher "seller's market" price where the market is under-supplied.

"It has been said that the remedy for low prices is low prices, so that producers with the highest costs shut down production, and the market gradually 'clears' from surplus to shortage. Conversely the remedy for high prices is high prices, so that demand is destroyed as consumers cut back, or substitute other commodities, and meanwhile new - typically higher cost - production comes into the market. That is precisely what has happened with the oil market in the last ten years, where the oil price has in my analysis been inflated and supported by 'passive' US funds through which investors seek to avoid inflation."

According to Cook, , who is now a strategic market consultant, oil prices began a long climb in 2005, and apart from a spike to $147/bbl in July 2008 and a collapse to $35/bbl in December 2008, the market price attained and then held seller's market levels from 2009 onwards.

He added that, "So we have learnt once again that financial support of prices at a seller's market price level inevitably leads - as it has throughout the history of commodity markets, from tin to coffee, and from diamonds to cocoa - to the mobilisation of new production, in this case of millions of barrels per day of high cost shale oil. But less obvious - albeit equally important - we have also seen US demand reduced by some two million barrels per day while EU demand has also been drastically curtailed."
According to the U.S. Energy Information Administration's estimations published on Sep.29, Oil-based products supplied into U.S. domestic market has decreased significantly since 2005.


"So to cut a long story short, I believe that the market price will in all probability continue to decline to - and possibly temporarily through - a buyer's market clearing level at between $60 to $70 per barrel," he added.
Cook said that the trend will result in a sharp reduction in high cost projects.

"Naturally, this will lead to high cost projects being shelved whether in shale or deep water, and eventually the market will swing back to shortage again. Perhaps one of the most interesting consequences of US shale oil is that it is now the US, and not Saudi Arabia, which is the swing producer of crude oil at the upper bound of a sellers market. I have never found Saudi pronouncements in respect of either their reserves or production capacity to be entirely convincing."

The analyst, however, believes that some good can come out of this gloomy situation, as producers and consumers can unite to tackle the problem.

"The outcome is that the boom and bust which is hard-wired into the current market

paradigm will continue in the oil market unless and until producers and consumers take action to bring it to an end through a new global oil market settlement which would be the energy equivalent of the 1944 Bretton Woods conference. I have long advocated such an initiative, and indeed Iranian President Hassan Rouhani proposed a multilateral institutional framework at the World Economic Forum in Davos earlier this year."

"If my long-standing forecast of a painful fall in the oil price continues to be vindicated, then perhaps a brief window of opportunity will open up to create a sustainable global market in oil and gas based upon energy co-operation and transparency, rather than energy competition and opaque dealings," Chris Cook added.

Subscribe to Trend in Google News! Subscribe
Kazakh National Bank talks reasons for recent base rate increase
Kazakh National Bank talks reasons for recent base rate increase
Kazakhstan’s KMG-Security LLP opens tender to buy diesel fuel
Kazakhstan’s KMG-Security LLP opens tender to buy diesel fuel
1,353 more COVID-19 cases reported in Kazakhstan
1,353 more COVID-19 cases reported in Kazakhstan
Loading Bars
Latest
bp’s ACE platform to be sailed away in coming months
Turkish president leaves for one-day visit to Azerbaijan
Azerbaijan publishes data on trade with China
Kazakh National Bank talks reasons for recent base rate increase
bp, SOCAR mull possibilities of increasing Azerbaijan’s gas output
Indian economy likely to record 9.5 pc growth this fiscal: Reports
Iran to complete transit routes - official
Physical gas flows, nominations at TAP’s interconnections
Kazakhstan’s KMG-Security LLP opens tender to buy diesel fuel
Some forces trying to break stability in region - Secretary of Security Council of Azerbaijan
Georgia releases data on COVID-19 cases for October 26
Uzbekistan takes measures to prevent changes in gas prices
Azerbaijan's International Anti-Terrorism Training Center holds opening ceremony for "National Security" course (PHOTO)
Revanchist forces in Armenia engaged in anti-propaganda campaign against Azerbaijan - State Security Service
SOCAR’s Kulevi Oil Terminal conducts contractor performance evaluation
Azerbaijani oil prices continue to rise
Kazakh president proposed to create interstate border trade zone with Turkmenistan
Reps of SMEs of Russia’s Yaroslav in Azerbaijan in search for potential partners - Russian official
Iran’s Shiraz Petrochemical Company records increase in revenues
UK's Heathrow Airport flags tepid travel recovery until 2026
Iranian currency rates for October 26
Georgia lowers import of Turkish-made leather goods
Majority of foreign investmens in Iran made in industrial, mining and trade sectors
Azerbaijani expert talks danger of new AY.4.2 variant of COVID-19
Value of cement supplies from Turkey to Turkmenistan rises
Law firm advising LUKOIL in acquisition of 15.5% interest in Shah Deniz named
PM Modi to attend ASEAN-India Summit virtually on Oct 28
Iran shares data on agricultural exports from Hamedan Province
Iran, Japan to collaborate in rural cooperatives sector
Apple importer iDigital plans TASE IPO at NIS 1b valuation
Turkey notes growth in cement exports to Uzbekistan
Azerbaijan prolongs program of cooperation with FAO
Oil gains as traders await stocks data, Iran talks
Embassy of Hungary with support of AZAL presents “Treasures of Hungary” photo exhibition (PHOTO)
U.S. Treasury's Yellen raised 'issues of concern' with Chinese Vice Premier Liu -statement
1,353 more COVID-19 cases reported in Kazakhstan
From digital transformation to strategic priorities: Siemens talks work in Uzbekistan (Exclusive)
Chinese Xi congratulates Mirziyoyev on election as Uzbek president
Man shot inside Union Square subway station in New York
Facebook invests billions in metaverse efforts as ad business slows
Egypt not to extend years-long state of emergency: president
Spain's COVID-19 cases top 5 mln
Seven killed, 140 hurt in protests against Sudan military coup
Western ambassadors took a step back, will be more careful: Erdogan
Tesla’s market value tops $1T after Hertz orders 100K cars
6 injured, including officer, in Idaho mall shooting
Saudi Arabia outlines plans under Mideast Green Initiative
British PM tells Putin Russia-UK relationship "is not the one" London wants
Chronicles of Victory: President Ilham Aliyev interviewed by Italian Rai 1 TV channel on October 26, 2020 (PHOTO/VIDEO)
Chronicles of Victory: President Ilham Aliyev addresses the nation on October 26, 2020 (PHOTO/VIDEO)
Chronicles of Victory: October 26, 2020
Development of financial technologies in Kyrgyzstan discussed in Bishkek
Georgian PM holds videoconference with Ukrainian, Moldovan counterparts
Modernization of our country, fight against unpleasant situations must reach a completely new level - President Ilham Aliyev
Master plan of Gubadli will probably be submitted in coming months - Azerbaijani president
Africa's COVID-19 cases near 8.5 mln: Africa CDC
For me, biggest reward is joy and pride in the eyes of former IDPs - Azerbaijani president
Second Karabakh war showed our strength and national spirit - President Ilham Aliyev
After 27 years, we ended occupation and drove enemy out of our lands - Azerbaijani president
Zangilan airport will be commissioned next year - President Aliyev
We will rebuild all villages of Gubadli district, including city of Gubadli - Azerbaijani president
After completion of restoration work in all liberated towns and villages, streets will be named after our martyrs - President Aliyev
Uzbekistan’s 9M2021 imports of Turkish leather goods increase
Azerbaijan defense minister meets leadership of Turkish National Defense University (PHOTO)
Azerbaijan, NATO talk prospects for co-op in various spheres (PHOTO)
Ernst & Young reveals total revenues of Uzbekneftegaz during 1H2021
Turkey shares data on cargo shipments via its Aliaga port
Iran talks exports of its nano products to Iraq, Turkey, Afghanistan
Azerbaijan’s State Tax Service expanding use of electronic signature
Turkey discloses volume of cargo shipment via Ambarli port in 9M2021
Iran sees increase in manufacturing of several industrial, mining products
Iran's trade turnover with Azerbaijan booming - IRICA
Azerbaijan’s timber imports from Russian region revealed
Iran's Energy Exchange announces products to be on sale on October 26
Turkmenistan, Kazakhstan sign number of bilateral co-op documents
Iran’s Bahar Azadi gold coin price slightly rising
Kazakhstan ready to significantly increase imports of Turkmen gas - President Tokayev
Azerbaijan publishes latest data on mine clearance work carried out in liberated lands
Georgia records highest budget deficit in ten years
Azeronline providing companies in Azerbaijan's liberated lands with Wi-Fi
Kazakhstan ready to increase trade with Turkmenistan
Azerbaijan to open embassy in Vatican
Program of Turkish president's visit to Azerbaijan announced
Airbus rejects pressure to curb record jet output goal
Azerbaijan to export Karabakh honey to France
Azerbaijan reveals funds allocated for drawing up master plan for Gubadli city
Galt & Taggart shares data on Georgia's tourism revenues growth
US data cloud giant Snowflake opens Israel office
Chinese oil company sells stake in Azerbaijan
Turkmenistan, Kazakhstan to dock telecommunication networks at border
It'll take time for Kazakhstan to accelerate its energy transition - Rystad Energy
Iran increases export by aid of private sector
Iran to reform budget plan structure
Azerbaijan discloses timing of booster vaccination for COVID-19 infected persons
Participants of online Global Poster and Painting Competition 2021 felicitated (PHOTO)
Azerbaijani defense minister meets NATO official (PHOTO)
Output volume at Azerbaijan’s Kursangi, Garabagli fields revealed
Fitch places credit ratings of 4 Qatari banks on negative watch
Kazakhstan to raise solid waste disposal share
Uzbekistan eyes implementation of joint projects with Russia
All news