The world’s biggest trading houses said on Wednesday they saw oil prices not falling below $65 per barrel and possibly breaking above $100 next year as U.S. sanctions on Iran reduce crude exports from the Islamic republic.
The range of views illustrates deep uncertainty among top industry players over the outlook, given the reimposition of sanctions on Iran and forecasts of slowing economies and energy demand in 2019, potentially leading to choppy trading.
Oil has rallied this year on expectations the sanctions, coming into force on Nov. 4, will strain supplies by lowering shipments from Iran, OPEC’s third-largest oil producer. Brent crude LCOc1 last week reached $86.74, the highest since 2014.
Jeremy Weir, chief executive of Trafigura, said at the Oil & Money conference in London that he would not be surprised to see oil trade at more than $100 per barrel next year.
Among others with a relatively bullish view was Alex Beard, chief executive for oil and gas at Glencore (GLEN.L), who forecast at the same event a mid-term oil price of $85-90.
“I think the sanctions will be very tough,” Beard said. “Waivers will be extremely limited if any, and I don’t see an end to it as the objective is regime change in 2019. I can’t see anything that will affect oil prices dramatically to the downside.”
A release of U.S. strategic oil stocks to ease the loss of Iranian supplies looked remote and would have limited impact anyway, and a plan by European nations aimed at maintaining trade with Iran was unlikely to help, he added.
“The European payment mechanism doesn’t shield you if you use the U.S. financial system … you can pay but don’t expect to be on their Christmas card list,” he said.
Beard added that U.S. infrastructure limitations would limit U.S. crude exports that could otherwise compensate and new refining capacity coming online in 2019 would add further tightness.