The Global Chief Executive Officer of Total SA, Mr Patrick Pouyanne, today said the future looks bright for global crude oil prices. But he is worried there might also be negative implications.
Mr Pouyanne, who told this to Bloomberg, stated that his forecast is based on the economic sanctions imposed on Iran, as well as political instability in Venezuela which have both led to the reduction in oil output.
Therefore, these factors combined would facilitate the continued oil price rallying, pushing it up to about $100 per barrel; a range that was last seen in 2014.
On the potential negative implications…
Meanwhile, Mr Pouyanne also expressed worry over this development. According to him, the potential negative implications are such that could affect both the global economy and the oil industry itself.
He said the projected double digits spike in crude prices could become a drag on growth, hampering development in emerging economies of the world whilst posing threats to the oil industry itself; even as alternative fossil energy providers take competitive advantage.
“I’m not sure it’s a good news, even for the oil industry; because you know when the price goes too high, then you open the door to your competitors.” – Pouyanne
A shortage in supply is encouraging price hike and America’s Trump is causing it
Recall that US President, Donald J. Trump, had recently demanded that members of the Organisation of Petroleum Exporting Countries (OPEC) immediately reduce crude prices or risk America’s disfavour. This was turned down by OPEC who stated that they cannot manipulate the price at which the commodity is traded.
It is important to note that Trump himself played a major role in facilitating the price hike. He imposed sanctions on Iranian oil, thereby cutting off supplies from the Gulf nation and by so doing, reduced overall crude output which ultimately resulted in a price hike.
He recently lashed out at Iran once again while chairing the UN Security Council Meeting on Wednesday, making comments that suggested the possibility of more impending sanctions for Iran.
The US Government has said it will not tap into its crude reserves in efforts to increase global crude output and crash the price. This is because as the country’s Energy Secretary (Rick Perry) said, doing this would “fairly minor and short-term impact.”
In the meantime, the continuous rally in crude prices is good for Nigeria. This is because the country’s economy is largely dependent on foreign exchange earned through crude exportation.
