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Oil Prices Are Unlikely To Break $40 This Year

Oil Prices Are Unlikely To Break $40 This Year

Despite production cuts from OPEC+…

Europe’s Gas Glut Could Hit Global LNG Market Hard

Europe’s Gas Glut Could Hit Global LNG Market Hard

Although LNG flows into Europe…

Egyptian Billionaire: Buffett Is Wrong, Oil Will Hit $100 Within 18 Months

Oil could hit $100 per barrel within the next 18 months, Egyptian billionaire Naguib Sawiris told CNBC on Wednesday—a hard pill to swallow with Brent currently trading below $30 per barrel.

Sawiris, chairman of one of Egypt’s largest companies, Orascom Telecom Media and Technology Holding S.A.E., is Egypt’s second-richest man and has a net worth somewhere between $3 billion and $7.5 billion. It’s hard to pin down because net worth is a (downward) moving target these days.

Sawiris told CNBC that he would buy airline stocks. At the same time, Warren Buffett’s Berkshire Hathaway dumped all of its airline holdings after losing nearly $50 billion in Q1. The selloff hit the airlines hard.

Sawiris not only talked up investing in oil, which he said could reach $100 per barrel but spoke out to CNBC against Saudi Arabia and Russia, who Sawiris alleges were trying to kill off the U.S. shale industry. Sawiris also told the network that he supported U.S. President Donald Trump’s plan to reopen the American economy.

“They might not find the cure, they might not find the vaccine, so how long are we going to be in prison in our homes?” Sawiris asked.

It is precisely this reopening that is the oil industry’s most promising—or rather, the only—path forward, as current demand destruction is too much for the heavily indebted US shale industry to bear forever—particularly when combined with overproduction from OPEC and its allies up until now.

Sawiris has been a champion of the reopen movement, stating as far back as a month ago that he would commit suicide if the lockdown measures were not rescinded within two weeks.

Air traffic is down 90%, with airlines currently losing $10 billion monthly, according to Barron’s, who reported on Wednesday that Citi analyst Stephen Trent shares also thinks that this might be a good time to buy into at least one airline: United.

Air traffic is a significant component of the transportation industry’s demand for crude oil and crude oil products.

By Julianne Geiger for Oilprice.com

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  • Kevin Thompson on May 07 2020 said:
    I've been preaching this for 6 years since 2014 when we hit the bottom of the barrel. It has a specific rhythm that it has followed since the 40s. I now know how and when to maximize my gains from crude oil. No one has listened yet but my child will be set for life.
  • Phil Mirzoev on May 07 2020 said:
    I totally agree. I expressed the same views more than once. It is actually amazing how little the "objective media" is talking about the destruction of supply in oil. Here I am just laying out again what I had already said regarding 70 USD/bbl in 2025 forecast published in a different article:

    "Supply Destruction Could Send Oil To $70". That is a very conservative forecast if we are talking about a 5-year horizon. It can end up not at 70, but closer to 170 USD per barrel by 2025.
    Permanent - that's the key word PERMANENT - destruction of oil capacity is taking place not only in the US shale sector (though the latter bears the brunt of it, to be sure), but in quite a number of countries, including Canada, Venezuela, Brazil, probably Nigeria etc.
    In my view, a total annihilation of at least 5 M bbl/day from the world capacity is a pretty conservative guesstimate, and the kind of chronic deficit - around 5% at least - that the world is going to wake up to after all the dust settles and the smoke clears, and the accumulated excess has been soaked up by the market after coming back to normal demand, is gonna make the world pay dearly for the past decade of artificially low oil prices (courtesy of shale, which was governed not by the market but by the borrowing and indirect subsidies).
    The problem will be compounded by the galling circumstance that this erasing of 5 M/day is going to be "super-permanent" in the sense that the substitution for this capacity is not going to be coming for years and years because after the shale bubble burst few crazy investors would even think about growth investment in oil - there was enough collective trauma caused by shale which was born a zombie, has stayed a zombie and is dying a zombie.
    It will take months to destroy the supply (and demand), and it may take a year for the demand to restore, and it can easily take a decade to restore the supply.
  • Maxander on May 07 2020 said:
    Dont know about $100 per barrel oil but America's shale oil industry although produced high quantity of oil for last few years, isnt a very big industry really as Shale oil reserves are not really that big in America.
    What America has in BIG is Shale Gas. America has largest reserves of Shale gas beneath its soil & that is yet to be tapped meaningfully.
    Shale oil is just peanuts & cant really pose a threat for Oil rich nations like OPECs. Russia also not an oil rich nation, it is gas rich nation & Russia should focus on Gas instead of Oil.

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