Gary Ross: Oil Prices Could Soon Hit $100

Gary Ross, Oil Prices Could Soon Hit $100Oil prices may go to $100.00 a barrel in five years according to an oil guru who predicted the oil crash of 2014.

Surprisingly, Gary Ross, the founder of consulting firm PIRA Energy Group, said oil markets aren’t nearly as oversupplied as many believe; the market will suffer from lack of supply and higher demand in the next few years.

“Current prices are unsustainable,” he said Monday in an interview in London. “It’s hard not to see oil hitting $100 a barrel at some point in the next five years.” (Source: Pira, last accessed July 21, 2015.)

Oil prices have been struggling to move significantly above $50.00 as concerns over a global oil glut continue to build up. Declining oil prices are triggered by a stronger U.S. dollar, a slowdown in the Chinese economy, and additional oil supply from Iran after the landmark deal.

Many analysts express their concern that the Chinese economy is slowing down faster than many had expected. China is the second-largest oil consumer in the world. The slowdown in the Chinese economy would have a significant amount of impact on oil prices.

Although China’s demand for oil is expected to slow down, Ross thinks that an increase in demand in industrialized countries would compensate for weak Chinese demand.

“Consumption will be strong in industrialized economies such as the U.S., Europe, and Japan, where fuel demand has swung to expansion from contraction,” according to Ross.

With respect to Iran, since the accord was signed last week, there has been a wide range of projections about the return of additional Iranian oil to the oversupplied market. Iran’s officials have signaled that the country is ready to pump as much as one million barrels a day into the market. However, Ross dismissed the impact of Iran’s crude on the fate of oil prices.

“Even higher exports from Iran following the landmark July 14 accord to ease sanctions may do little to check oil’s advance,” Ross said. “The increase may be limited to less than 500,000 barrels a day over six months and the country will struggle to sell its condensate stockpiled on tankers.”

Above all, many investors and speculators expect that in these circumstances the oil prices may even go lower. Best case scenario; they remain at the current level for the next few years. “We are approaching selling exhaustion,” Ross said. “The magic of prices works.”