Fallout From U.S. Anti-Iran Sanctions:
LONDON (Dispatches) -- The world’s biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year amid the specter of new U.S. sanctions on Iran.
The range of views illustrates deep uncertainty among top industry players over the outlook, given the reimposition of sanctions on Iran and forecasts of slowing economies and energy demand in 2019, potentially leading to choppy trading.
Oil has rallied this year on expectations the sanctions, coming into force on Nov. 4, will strain supplies by lowering shipments from Iran, OPEC’s third-largest oil producer. Brent crude last week reached $86.74, the highest since 2014.
Jeremy Weir, chief executive of Trafigura, said at the Oil & Money conference in London that he would not be surprised to see oil trade at more than $100 per barrel next year.
Among others with a relatively bullish view was Alex Beard, chief executive for oil and gas at Glencore, who forecast at the same event a mid-term oil price of $85-90.
A release of U.S. strategic oil stocks to ease the loss of Iranian supplies looked remote and would have limited impact anyway, he added.
"There will be some Iranian exports but the amount will depend on the price. If oil goes up to $100 a barrel then waivers, if it stays around $80 a barrel then no waivers,” the chief executive of Gunvor, Torbjorn Tornqvist, said.
Uncertainty surrounding Iran's oil industry ahead of forthcoming U.S. sanctions could prompt "extreme volatility" for oil prices, BP's chief executive told CNBC Wednesday.
"I think it's going to be 45 days of extreme volatility, it could spike up, it could also go the other way," he told CNBC's Steve Sedgwick in London.
It's hard to be precise over how much of Iran's production will be affected by the sanctions. It largely depends on whether the country's oil-buying customers are afraid of secondary sanctions from the U.S. if they do business with Iran.
BP and Serica Energy were granted a new license Tuesday to run a North Sea gas field partly owned by Iran showing the U.S. is willing to make some exemptions to the reach of the sanctions.
"If waivers were granted to others, to big oil consuming countries, you could see it (the price) go down, there's a lot of uncertainty right now," Dudley said.
On Wednesday, Brent crude futures were trading at $84.96 per barrel while U.S. West Texas Intermediate was trading at $74.92.
President Donald Trump has called on OPEC to increase production to mitigate any Iranian shortfall and impact on prices. Saudi Arabia, the de-facto leader of OPEC, says it has the spare capacity to fulfill any shortfall created by Iran, but Iran has disputed that.