Oil price likely to settle at around $50
Slowing Chinese growth slows and activity in the US shale industry will keep a lid on the price of Brent crude which is likely to settle at around $50 a barrel.
Vitol Group BV chief executive Ian Taylor told Bloomberg in an interview that “it’s hard to see a dramatic price increase.
He added: “We really do imagine a band, and that band would probably naturally see a $40 to $60 type of band. I can see that band lasting for five to ten years. I think it’s fundamentally different.”
Vitol trades more than five million barrels a day of crude and refined products – enough to cover the needs of Germany, France and Spain together – and its views are closely followed in the oil industry.
Mr Taylor told the agency that he doubted doubts the oil market would ever see a return to triple-digit prices because “there is so much more supply” and the global economy is more efficient in consuming crude. Additionally, Iran is returning to the market and growth in emerging markets, the biggest engine of oil demand, is slowing.
The oil price fall was exacerbated by a decision by the Organisation of Petroleum Exporting Countries (Opec) in November 2014 to drop its traditional policy of adjusting supply to manage prices. Instead it has maintained output to defend its position against rival suppliers such as US shale and Canadian tar sands producers.
Mr Taylor’s comments came as a new oil and gas strategy for the North Sea calls for a transformation of the supply chain to drive efficiency, innovation and internationalisation to ensure a long and vibrant future for the sector.
The revised plan, in a report entitled Maximising Value, Oil & Gas Strategy 2016-2020, comes amid predictions that 146 rigs will be taken out of commission over the next ten years.
The Industry Leadership Group (ILG) – co-chaired by Scottish Business Minister Fergus Ewing (pictured) and oil and gas specialist Melfort Campbell – has updated the strategy first published in 2012.
It has been developed in response to the challenging operating environment caused by the low oil price and a maturing North Sea basin. Among its targets is worldwide recognition as a centre of of excellence in sectors such as subsea, asset integrity, digital offshore and decommissioning.
Mr Ewing said: “While it is clear that the oil and gas industry faces severe challenges from a low global oil price, there are still opportunities that Scotland can capture from new discoveries and through our world-class supply chain.”
Mr Campbell, added: “Scotland’s oil and gas sector is in a completely different place than it was in 2012 when the original strategy was launched.
“Collaboration will be key as we focus our efforts around internationalisation and innovation as well as ensuring the supply chain is embedded in everything we do.”