Oil prices will remain low for at least another ten years, says largest independent oil trader. According to Bloomberg, the head of Vitol group Ian Taylor explains this trend slowing growth in the Chinese economy and the production of shale oil in the US, which has become a constraint to any increase in the cost of hydrocarbons.
According to the businessman, “it’s hard to expect a sharp increase in prices”, which, as suggested by Taylor in the next decade will fluctuate in a range centered at around $50/bbl. “We really envision this range, which would probably be natural to put in the limits from $40 to $60,” he said. “I predict that this range will last from five to ten years. I believe this is a fundamental difference,” added Taylor.
The businessman said he is not sure that prices have passed the bottom as the supply continues to exceed demand, leading to increased world oil reserves. However, he believes that the prices will be somewhere in the second half of the year prices will recover to $45-$50 /bbl.
Taylor doubts that in the foreseeable future the market will see three-digit oil prices. He explained that the proposal increased significantly, and the global economy became more efficient in the consumption of hydrocarbons. In addition, said the head of Vitol, the market returned to Iran, and China have changed and are no longer able to maintain consumption growth unabated. Taylor also made with a probability of 60% agreement cut production between exporters and non-OPEC.
Six months ago Taylor thought that by the end of 2016 prices will remain in the range of $40-$60/bbl., but can get lower. Then he said that excess reserves will be able to sell in 2017.
Lower bounds predicted by the head of Vitol, the range will mean that Brent prices will not increase in comparison with the current quote of around $35/bbl., while the upper limit will return the value of oil to July 2015, when the industry has already started to take measures to cope with crisis, says Bloomberg.
The Agency reminds that the forecast for Taylor, if it happens, will mean that oil exporters and the oil companies to deal with the longest period of low prices from 1986-1999, when the price per barrel ranged from $10 to $20.
The company Vitol sells every day more than 5 million barrels. This amount would be enough to cover the daily needs of Germany, France and Spain combined. The traders benefit from increased volatility in the oil market. According to Taylor, Vitol’s net profit by the end of 2015 will be higher than in 2014, when the company earned $1.35 billion, However, he noted that the 2009 record of $2.3 billion to retry will not succeed.