2007 - A Wild Card

APS Review Oil Market Trends, June 6, 2005

While most experts are certain WTI will remain high through to end-2006, no one is sure about the period in 2007 and beyond - with pessimists foreseeing a global recession and OPEC optimists betting on high prices for many years. Daniel Yergin, head of Cambridge Energy Research Associates (CERA), on May 27 told CNBC: "I think two years from now, we'll look more with $30 as a floor than what we're looking at today".

Matthew Simmons, president of investment firm Simmons & Co., who spoke on the same programme with Yergin, said world oil production may have already peaked. But Yergin questioned the so-called "peak oil" theory, saying world production is set to rise by as much as 16m b/d over the next decade. He said: "This is about the fifth or sixth time that the world has run out of oil, and at least in our study we see adding about 16 million barrels a day net of oil between now and the end of the decade, which is in fact very big number". One key factor outside OPEC is Russian oil production which could stagnate for years or even fall below a near-term level of 9.2-9.4m b/d.