A possible return to $100/b oil is likely to be short-lived given the “suffering” of industries due to high energy prices and potential for upstream producers to step up spending, said Claudio Descalzi, CEO of Italy’s Eni.
Speaking at the ADIPEC conference in Abu Dhabi, Descalzi took a cautious stance on the potential return to three-figure oil prices, (last seen in 2014), adding it was the stability (or lack of stability) of price levels that would also impact on investment in new supply.
Oil industry participants have increasingly talked of a return to $100/b oil as a possibility, but with many pointing to decisions by OPEC+ producer nations as a crucial determinant.
Descalzi, however, highlighted the likely spur to activity that higher prices would represent for the US shale sector, deemed by commentators to have been in cautious mode and prioritising debt-reduction in recent times.
Descalzi told the ADIPEC event: “I’m not sure we are going to see that [$100 oil]. If we do, it’s going to be for not a long time. It is a high price.
“With the rebounding [prices] and recovery, a lot of industries are suffering. Now they are reducing the amount of energy they use. If the price is too high, then they’ll use less energy and the price will go down.”
“$100 is not sustainable. We also have to consider that if… the situation is less volatile, we start making investments in upstream again,” Descalzi said, going on to estimate current oil demand at “close to 100 million bpd,” with supply at 95 million-96 million bpd.
While Eni itself has strictly avoided getting involved in the US shale sector, Descalzi forecast a potential revival of industry activity there as producers step up drilling.
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