Business | Oil & Gas
Experts bet on oil climbing to 2005 levels by 2010
The price of oil may rebound to about $80 per barrel next year and give a boost to output expansion projects, industry experts said on Tuesday.
- By Shakir Husain, Staff Reporter
- Published: 23:15 November 25, 2008
Dubai: The price of oil may rebound to about $80 per barrel next year and give a boost to output expansion projects, industry experts said on Tuesday.
Sadad Al Hussaini, former executive vice-president for exploration and production at Saudi oil firm Aramco, said he believed oil prices - which have fallen to $50 per barrel from the record high of more than $147 in July - will climb back to the 2005 levels of $70-$80 by 2010.
Long-term challenges
Speaking during a session at the DIFC Forum, Al Hussaini said the price of oil would rally to around $90 by 2012. He said that barring any major oil discovery, the world will face long-term challenges in the supply of oil.
Fears of a global recession are bringing down oil prices as demand has weakened.
Herman Franssen, president of US-based International Energy Associates, told Gulf News the world needs to add oil equivalent to Iran's total production in order to keep up with the rising demand.
"It is in nobody's interest to see oil prices go too low," Franssen said, adding that if the price did not rise to $80 per barrel by next year it would affect capacity expansion plans.
However, it remains uncertain whether the world will see an economic recovery soon. Growth in Asia, particularly in China and India, is seen creating new demand for oil as a recession in the West will cause consumption to shrink in developed economies.
Nader Sultan, former chief executive officer of Kuwait Petroleum Corporation, said the rise of China is providing a boost to the demand for oil, as is the growing energy needs of other emerging markets.
But concerns have grown about the growth of Asia's export-driven economies as well.
"The Chinese economy is in the process of adjusting. It is hard to predict what will happen in China. Certainly there are major concerns," according to Al Hussaini.
A further oil price drop could also set back ambitious development plans in the Gulf. At the current prices levels, the Gulf countries appear to be still earning healthy revenues from their oil exports.
Gulf Arab countries are producing about 18 million barrels per day.
"The GCC is doing quite well. The budgets are shrinking but that does not mean there is no surplus," Al Hussaini said.
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