A crude oil price of $100 per barrel would be unsustainable, said the Iraqi Oil Minister, Ihsan Abdul Jabbar Ismail, as quoted by Reuters.
In an interview with Skynews Arabia, Abdul jabber Ismail also said that Iraq planned to raise its oil production capacity to 8 million barrels daily, saying this would be a balanced production capacity.
The senior Iraqi official’s opinion regarding oil prices is similar to that of Bank of America analysts who last week warned that Brent crude may well hit $100 this winter.
With gas prices soaring, an uptick in demand for diesel could result in a global economic crisis as governments are already stretched fiscally and monetarily, the BofA analysts said.
The factors that could lead to this perfect storm include a cold winter, keeping gas demand high and increasing demand for oil as some utilities switch from gas to oil, which would still be cheaper, and an increase in jet fuel demand.
“If all these factors come together, oil prices could spike and lead to a second round of inflationary pressures around the world,” the analysts wrote in the note. “Put differently, we may just be one storm away from the next macro hurricane.”
Such a crisis would lead to economic contractions and, eventually, lower oil prices, proving such a price level is unsustainable in the current state of the global economy.
However, according to the BofA analysts, it will be a while before prices begin to decline, even in the event of a global economic contraction. According to them, “A multiyear run up in crude oil prices is now in the cards.”
OPEC agrees with the bullish outlook, seeing demand or oil rising through 2035 despite Paris Agreement commitments.
“There are still considerable doubts as to whether all these ambitious climate-mitigation commitments will be met in the proposed timeframe,” the OPEC secretariat said last month.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.