You are here
Oil seen by Opec's former research head falling on slower demand
[VIENNA] Brent crude prices will be lower by the end of the year as production is set to increase from Iraq and Iran, shale oil output stabilizes while demand slows, according to Opec's former head of research.
Brent will trade between $40 to $50 a barrel in the fourth quarter, from about US$64 now, Hasan Qabazard, who was Opec's research head from 2006 to 2013, said in an interview in Vienna on Wednesday. The end of the US driving season by then will mean slower demand, he said. Oil climbed 12 per cent this year on signs of more demand and speculation of reduced US supply.
"The fourth quarter is going to be a real test for oil prices," Mr Qabazard, who is now chief executive officer of Kuwait Catalysts Co, said on the sidelines of an Opec seminar on prospects for the oil industry. The meeting was attended by chief executive officers from Exxon Mobil Corp to BP Plc and Royal Dutch Shell Plc and oil ministers from Saudi Arabia to Kuwait and United Arab Emirates.
Brent's recovery from a six-year low in January is stalling on signs a global glut estimated by Venezuela at 2 million to 2.5 million barrels a day will persist. Iran's Oil Minister Bijan Namdar Zanganeh said he's delivering a letter to Opec members meeting in Vienna alerting them to make room for an increase in the country's oil output.
Shell CEO Ben Van Beurden and BP CEO Bob Dudley said they are both interested in investing in Iran if international sanctions related to its nuclear energy program are removed.
Opec will keep its production target unchanged when ministers meet on Friday, according to a Bloomberg survey last month. The 12 members including Iraq and Iran pumped 31.58 million barrels a day in May, exceeding the 30-million barrel target for a 12th consecutive month, data compiled by Bloomberg show.
Prices are attractive for non-Opec producers to keep drilling, Mr Qabazard said. US shale oil output is now steady at about 4 million barrels a day, and will grow to 5 million barrels a day by 2018, he said.