As alternative energy fuels continue to attract more investors across the world, oil prices are poised to crash to just $10 per barrel, an expert has said.
In an interview with CNBC at the weekend, Chief Executive of Longview Economics, Chris Watling, said the crash may be experienced over the next six to eight years.
In his forecast for 2018, Mr. Watling acknowledged that a key catalyst for the oil market would most likely be Saudi Aramco’s initial public offering (IPO) in the second half of next year.
Speaking on Saudi Arabia’s state oil group being launched on the international stock market, he said the oil producer needed to get it away before the crash.
“Well I think they need to get it away quick before oil goes to $10 (per barrel),” he said.
Mr. Watling, however, explained that he did not necessarily expect such an intense decline in oil prices over the coming weeks or months.
“What happens with electric vehicles is really, really important,” he said, saying that’s because “about 70 per cent of oil is used for transportation.
” According to the International Energy Agency (IEA), the global outlook for oil markets in 2018 could put a dampener on hopes for higher prices.
In its report Thursday, the IEA said global stock builds, rising nonOPEC production and static oil demand could weigh on the oil price.
The organisation’s latest monthlreport was published amid optimistic forecasts from the major oil producer group OPEC, with the cartel arguing there was evidence of the global oil market rebalancing following several years of low prices.
In June 2014, the price of oil collapsed from almost $120 a barrel due to weak demand, a strong dollar and booming U.S. shale production.
OPEC’s reluctance to cut output was also seen as a key reason behind the fall.
But, the oil cartel soon moved to curb production — along with other oil producing nations — in late 2016.
But Nigeria was exempted from the cut imposed on member countries in January 2017, due to its low output caused by unrest in its oil rich Delta region.
In September, the Joint Organisation of Petroleum Exporting Countries, OPEC, and non-OPEC Ministerial Monitoring Committee, JMMC, also extended the exemption granted the country over the output cut.