Will Oil Ever Hit $100 Again?



Will Oil Ever Hit $100 Again?
Rigzone asks industry experts whether the price of oil will ever reach $100 per barrel again.

Oil will hit $100 per barrel again, according to RoseAnne Franco, head of oil and gas at global risk consultancy Verisk Maplecroft.

“It’s a question of when and will it stay there … the level of geopolitical uncertainty we confront today is particularly volatile and precisely the type of conditions that could lead to an oil price shock,” Franco told Rigzone.

“That said, the uncertainty appears to cut both ways as global economic growth, which supports higher oil demand, is vulnerable to heightened geopolitical risk, which erodes it,” Franco added.

Fundamentals don't appear to support such higher price levels this year, according to Franco. The Verisk Maplecroft representative stated however that “beyond 2020, an oil supply crunch due to the retrenchment in spending in the oil patch coupled with a perfect storm on the geopolitical end could easily trigger another price shock.”

Offering his view, Devin Geoghegan, Genscape’s global director of petroleum intelligence, told Rigzone that “unless electric cars become the unicorn of demand growth deceleration, $100 oil seems highly likely at some point during the next 10 years.” The Genscape director added however that there are “very real headwinds” to reaching that figure again.

“First, stagnant or declining demand could cause an abrupt shift lower in multi-year supply need expectations,” Geoghegan said.

“Second, technology could conceivably continue pushing break-evens lower through either improving costs in currently uneconomic areas or by opening yet to be developed shale oil outside the U.S. The most likely near-term impact would be the continued lowering of offshore development costs,” Geoghegan added.

Outlining further headwinds, Geoghegan said new plays can still be discovered and even existing plays that have had a decline in activity could become resurgent due to higher prices. The Genscape representative also claimed that an “outside risk” would be if certain countries were able to reverse course and regain historical production highs.

Possible, But Probably Not Sustainable

PwC’s Aberdeen Office Senior Partner, Kevin Reynard, believes it is “feasible” that the oil price will surpass the $100 mark, but thinks very high oil prices for a sustained period are “hard to envisage.”

“It is possible that we could see oil prices spike if demand rapidly outpaces supply, which has not been the case in recent years. That said, there remains concerns that there could be a price spike in the medium term should a supply crunch emerge against a backdrop of strong demand,” Reynard told Rigzone.

“Whether or not this sees the price surpass the $100 mark again depends on a number of factors but given the expected lifecycle of hydrocarbons and long-term inflation it is feasible, though very high oil prices in relative terms for a sustained period as we witnessed pre-2014 are hard to envisage,” he added.

Giving his opinion, EY’s Global Oil & Gas Senior Analyst, Paul Bogenrieder, outlined that $100 oil is “certainly possible” but “probably not” sustainable.

“If prices were to move near to or above $100 for any length of time, the market would respond and bring a lot of oil forward. That would be enough to bring prices down below that level,” Bogenrieder told Rigzone.

Not the Preferred Option

Oil prices over $100 per barrel are not the preferred option for either producers or consumers, according to Interfax Energy Senior Energy Analyst Abhishek Kumar, who believes such prices are “unlikely” to happen as long as the OPEC+ group continues to manage the market.


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WHAT DO YOU THINK?


Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.

Bruce  |  February 18, 2019
Eventually, when "green NGO's" and the hoodwinked public in general, finally discover (probably as a result of current USA experience) that properly regulated fracking is not any more threatening or damaging than other forms of mining (probably less!), the world's accessible and already discovered sources of shale oil and gas will surely keep a lid on energy costs, and may even become a "game changer" in world poverty stakes (the root cause of most of humanities problems) with huge amounts of methane available for cheap production of urea, multiplying crop yields in third world countries! If he "Greenies" will let it happen, of course...
henry bertram  |  February 11, 2019
I believe your experts decline to discuss an important aspect of oil pricing and that is what will cause the value of the us dollar to decline? I don't profess to know the answer but the reality is that the us dollar has steadily decline for as long as it has existed over the long term.
Johann  |  February 11, 2019
Lots of words, in the end the only thing that is certain is that nothing is certain. Oil have proved so many experts wrong over the last 60 years or so.