A barrel of oil to 380 euros in 10 years?

PARIS (Reuters) - A barrel of oil could cost $ 380 in ten years, nearly eight times more than today, said investment bank Ixis-CIB in a study published Monday.

"By analogy with the oil shocks of the 1970s, it does not seem unreasonable to us to predict a price of 380 dollars per barrel for oil in 2015", write the authors of this study, the economists Patrick Artus and Moncef Kaabi.

On the contrary, they deem “very conservative” and “totally unreasonable” the hypotheses according to which the price of a barrel of crude, which today oscillates around 50 dollars, could return between 30 and 40 dollars in the ten years to come.

Currently, world oil consumption (84,3 million barrels per day) remains below the maximum production capacity known (87 million bpd).

By extrapolating the current trend in world oil consumption, Ixis-CIB economists estimate that it will be around 108 million bpd in 2015 and will be 8% higher than production capacities estimated at 100 million bpd.

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According to them, several factors explain this evolution:

- a slight increase in production capacity resulting from a continuous decrease in new oil reserves found;

- an increase in oil consumption faster than that of world GDP, in particular with the prospect of a significant increase in demand from China;

- the relatively slow development of alternative energy sources.

“On the horizon of ten years, we can consider that the energies substitutable for fossil fuels (return of nuclear power, hydrogen…) will not have developed much”, write Patrick Artus and Moncef Kaabi. “The world will therefore still depend on usual forms of energy resources. "

According to the econometric calculations they cite, the elasticity of demand for oil in relation to the price per barrel will be very low under these conditions: a 25% increase in the price of crude would only lead to a reduction of 1% of Requirement.

"To reduce global oil demand by 8% in 2015, from 2005 to 2015, a 6,9-fold increase in the real price of oil would be required," they add. This gives, taking into account annual inflation of 2,5% in the United States, "a nominal oil price of 380 dollars per barrel in 2015".

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Source: Reuters

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