Middle-east Arab News Opinion | Asharq Al-awsat

Oil prices fall below $100 per barrel for first time in 14 months | ASHARQ AL-AWSAT English Archive 2005 -2017
Select Page
Media ID: 55336388
Caption:

An oil refinery in Texas City, Texas, USA is seen in this September 16, 2008 file photo. (AFP Photo/Jim Watson/Getty Images)


An oil refinery in Texas City, Texas, USA is seen in this September 16, 2008 file photo. (AFP Photo/Jim Watson/Getty Images)

An oil refinery in Texas City, Texas, USA is seen in this September 16, 2008 file photo. (AFP Photo/Jim Watson/Getty Images)

Dammam, Asharq Al-Awsat—Prices of Brent crude fell below 100 US dollars per barrel for the first time in 14 months on Monday on the back of increased supply of shale oil from the US, while energy sector experts tell Asharq Al-Awsat they expect prices to stabilize during the winter season.

On Monday, prices slid to their lowest level since May 2013, at 99.36 dollars per barrel.

At the time of writing on Tuesday, prices had rallied slightly once again, rising 33 cents to reach 100.53 dollars at 11:35 am GMT.

Oil expert Sadad Husseini told Asharq Al-Awsat the increased production of shale oil in the US had pushed prices down. He added that the US had boosted production from 5 million barrels per day (bpd) in 2010 to 8.5 million bpd in 2014, which has led to an increase in US oil exports flooding the market, with Europe especially constituting a prime destination.

“This had a negative effect on global oil market prices,” he said, adding that it would be necessary for all oil producers “to live with the new reality” of US competition, as shale oil production in the US is expected to further increase to 10 million bpd by 2017, after which the recent production spurt would slow down, having less of an effect on prices.

Husseini added that he expected US consumption would not exceed the 18-million-bpd mark and that prices would stabilize, oscillating 2.5 dollars either side of the 100-dollar mark.

Saudi Oil Minister Ali Al-Naimi had previously said Saudi Arabia considered this price a fair one for both buyers and producers, having previously stated that a 95–110 dollar price range was “the most ideal” for the Kingdom.

An official from OPEC told Reuters on Monday that the organization was not worried about the price slump, expecting the market to stabilize in the coming weeks due to winter demand.

Kuwaiti oil expert Kamel Al-Harami also expected prices to stabilize come the winter. Speaking to Asharq Al-Awsat, he said: “The coming period, lasting until the end of first quarter of next year, will see prices hover around 90–95 dollars per barrel. The winter season will help stabilize prices around this range,” he said.

Harami also acknowledged the effect the shale oil flooding the market from the US had had on prices. He said that for prices to jump above the 100 dollar per barrel mark once again and stay there, it would be necessary for the market to have some kind of “catalyst” currently not present due to demand being sated by US supply.

“The Ukrainian–Russian crisis could shake up prices, and the war against the Islamic State of Iraq and Syria could also affect the market,” he said.

Speaking of reports that Saudi Arabia was currently offering discounts to a number of its buyers, Harami said: “Saudi Arabia leads the market, and the reports talk about competition the Kingdom is facing from some Gulf oil producers and African countries. This was what led the Kingdom to try and look after its customers and maintain [its] prices in the global market.”