The bosses of some of the world’s biggest oil companies said crude prices are likely to keep rising because a lack of investment will curtail future supply.
The chief executive officers of Royal Dutch Shell Plc and TotalEnergies SE joined major commodity traders and banks in predicting that oil could go as high as $100 a barrel, although they also said volatile markets could drive prices back down again.
The lack of investment is “going to exacerbate supply and demand tightness as the economies pick back up again, and then in time we’ll see supply pick up and rebalance,” Exxon Mobil Corp CEO Darren Woods said at the Qatar Economic Forum yesterday. But “in the shorter term probably higher prices” are more likely.
Trading house Trafigura Group said oil could top $100 a barrel over the next year. Bank of America Corp also forecast this week that prices could jump to that level and Goldman Sachs Group Inc said it doesn’t rule it out.
Benchmark Brent crude has climbed 44% this year as widespread vaccinations increase mobility and boost demand.
Global markets had one of its most turbulent years in history last year with the coronavirus sending prices crashing. But roads in Europe and the US are starting to fill up again and more Americans are flying. While that could drive prices higher in the near term, the energy transition means oil consumption could start to plateau and eventually decline in the longer term.
The energy shift means there hasn’t been enough investments in oil and gas projects and that could push prices higher, Qatar’s Minister of State for Energy Affairs, HE Saad bin Sherida al-Kaabi said at the same event.
BP Plc CEO Bernard Looney said earlier yesterday that rising crude is helping in the transition with better cash flow and returns for shareholders.
There’s “quite a chance” of reaching $100 a barrel, “but we could see again in coming years some low prices,” TotalEnergies CEO Patrick Pouyanne said. “We’ve been accustomed to volatility.”
Qatar’s Ministry of Commerce and Industry, Investment Promotion Agency Qatar and Media City Qatar are underwriters of the Qatar Economic Forum, Powered by Bloomberg.