Real oil price should be $ 100

Oct 16, 2004 02:00 AM

The current situation in the world oil markets should lead oil importers to expect higher prices in the future.
"I think the real price for oil to be $ 100," said MP Kamal Daneshyar. "Therefore, importers are now buying oil much cheaper than the price they'll soon face". Much of the price increases will come from growing consumer demands.
"We live in an era of supply decline and demand growth", he added. Figures show a substantial decrease in oil extraction index, he said, adding that conditions will certainly get worse if instant decisions are not made by both importers and exporters.

Daneshyar, who is head of the parliament's energy commission, stated that the process of oil production in Iran has also fallen into decrease.
"We have come down from producing 6 mm bpd in 1979 to 4 mm bpd now", he uttered. "This is caused by drops in oil reserves and oil reserves pressure." Meanwhile, he said that more than 30 reserves in the country have half-lived. "These should be immediately revived through gas injection." As long as oil demands grow and supplies are constant, as long as world population increases, and as long as global economic progress continues, oil prices will soar, Daneshyar added.

Researches show that, presently, the world demand for oil is about 120 mm bpd while the total oil production moves steadily at about 80 mm bpd. On the other hand, deputy head of Researches in the Institute for Energy Studies, Mohammad Mazra'ati believes oil prices will decrease as producers pump more oil into the world markets.
"It will not stay at $ 50 for long", he added. Oil exporters will supply the markets with their maximum capacity to gain much of the status quo, he implied.

There are many unregistered oilfields in the US and Canada, Mazra'ati stated, adding, no doubt, they will use the capacity of these reserves if they see prices still move up. He predicted that, as profitability grows in high-end oil industries, it leads to the increase of oil capacity and therefore, more oil will be offered to the world markets.
"That's why I believe the prices will come down sooner or later".

Source: Tehran Times
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