Davos 2017: Shale Oil Will Keep Crude Prices In Check, Says IEA’s Fatih Birol
Birol expects oil prices to be around the $50-$55 per barrel level for a short period.
Crude oil prices are expected to be volatile in 2017 as the U.S. produces more shale oil, said the executive director of International Energy Agency, Fatih Birol.
Prices have doubled from $28 per barrel last year to around $55, prompting U.S. shale oil producers to increase output, Birol told BloombergQuint's Menaka Doshi on the sidelines of the 47th World Economic Forum in Davos, Switzerland.
We see U.S. oil production increasing and bringing a lot of oil in the market in the next few months, which will again put downward pressure on prices.Fatih Birol, Executive Director, International Energy Agency
Birol expects oil prices to hover around the $50-55 per barrel at least in the short term. He said U.S. shale oil is making a comeback with volumes picking up, which may not let oil prices touch levels that some nations which are part of the Organization of Petroleum Exporting Countries (OPEC) want.
Perhaps, a desired price level for some of the production countries will be difficult as the U.S. shale oil plays the role of capping price increase.Fatih Birol, Executive Director, International Energy Agency.
Geopolitical tension poses a threat to increased crude supply from the Middle East, said Birol.
Last month, the share of Middle-Eastern producers in the global oil production reached a historical high of 40 years. We’ve never seen Middle-East countries’ share so high. Think about this number, and then about what you see happening in the Middle East, in Iraq, Libya or Syria. I hope oil remains a business rather than an exertion of geopolitics.Fatih Birol, Executive Director, International Energy Agency
Donald Trump’s opposition to the Iran deal is another threat to crude oil production, said Birol. The U.S. President-elect was very vocal in opposing the deal, but it is unclear whether it was just a campaign rhetoric.
Iran deal brought a lot of oil recently in the market. Many companies will depend on political stability for investments to be made in Iran. Iran still needs to be at good terms with the international community.Fatih Birol, Executive Director, International Energy Agency
He also praised India’s progress in solar power, and the potential it holds. Calling it a "global figure" in solar power generation, Birol said the solar story in India could be a big success with continued government support.
Birol also sees better prospects for the renewable energy industry amid the volatility surrounding oil prices.