Oil Prices: T. Boone Pickens Sticking to $70.00 Oil Price Forecast

oil price forecastOil Prices Could Hit $70.00 Per Barrel, Says T. Boone Pickens

Collapsing U.S. energy production could spark shortages, sending oil prices as high as $70.00 per barrel early next year. At least, that’s the latest oil price forecast from famed energy investor T. Boone Pickens.

The one commodity with the most international economic and political influence is unarguably the “black gold.” Down to its 10-year lows, it doesn’t seem like the worst days for oil are over yet. Lower oil prices caused many energy investments to slump, ultimately dragging down the S&P 500 and Dow Jones Industrial Average indices. The last month, however, boded well for oil, with the black gold rebounding from a high $30.00-rage to a high $40.00-range this week. Will the momentum continue? It’s doubtful.

T. Boone Pickens appeared on CNBC earlier this week to reiterate his take on oil. He had earlier predicted oil prices to revert back to $70.00 a barrel by the end of this year. He maintains his stance on price reversion but doubts it will go back up to that range in 2015. (Source: The problem with my $70 oil call, CNBC, October 8, 2015.)

“I thought worldwide demand would go up—and it has. The latest from the International Energy Agency shows demand is already up about 1.7 million barrels a day.

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I thought supply from the United States would go down—and it has. Companies have been laying down rigs, and U.S. production has dropped by 500,000 barrels a day since June.

I thought supply from the Organization of the Petroleum Exporting Countries (OPEC)—and specifically Saudi Arabia—would also go down. You can’t get rich selling anything for less than it costs to maintain the country. I expected they would at least maintain, if not cut, production to command a better price.

That didn’t happen!”

It appears that not only are the OPEC countries looking for ways to increase their market share against key players U.S. and Russia, but that there is an internal ongoing competition within the OPEC countries. Kuwait and Iran have been the two OPEC countries that aggressively cut rates last month to increase their market share against the biggest supplier of oil, Saudi Arabia.

Last year, Saudi Arabia triggered a price war within the OPEC countries to gain control of the oil market in the region. The move, ostensibly, had geopolitical implications: to destabilize Iran and Russia backing rival Bashar al Assad in Syria, and to gain strategic ground in the Middle East oil and gas pipelines war, the Iran-Iraq-Syria pipeline being one of them. Now that the sanctions on Iran are about to be lifted in the coming year Iran is moving fast to find its way back into the international market.

Pickens speaks on the matter, saying Iran and Iraq will soon become major constants in the oil equation.

“Iran will become an even bigger factor in the next few years now that the removal of sanctions allows them access to more of the world market. And Iraq has some of the world’s largest reserves. If the country ever settles down, the Iraqis will have a major say in world prices. […]

This administration has run out the clock for a long-term energy plan. The ball is now in the courts of the candidates for president in both parties. They need to stop bickering about how they look, and stop bragging about what they did in their past careers. The candidates should take a good hard look at energy as a centerpiece of their economic policy and tell us what their plan is.”

You can read T. Boone Picken’s full commentary here.

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