Current Oil Prices may Fall with Successful US Oil Exploration

With the successful oil exploration of the United States in its own land, the current oil price trend is moving in a downward direction, even though the risk of outward shocks is still present, according to Nouriel Roubini, an economist based in New York.

During the Middle East Hedge Funds summit, the economist said that, while there is a low possibility for surplus inventories of crude in the short-term, there is a high chance that the increased exploration for oil by the largest economy of the world, combined with the increasing shale gas discoveries, can put downward pressure on the price of oil in the medium term.

Last November, the International Energy Agency said that the United States will surpass Saudi Arabia as the biggest producer of oil worldwide by the year 2017, and may become a net exporter of oil by the year 2030.

The prices of Oman crude further dropped to its lowest level in three months during yesterday’s trading at the Dubai Mercantile Exchange as it settled lower by 0.85 percent at $104.71 a barrel.

According to Roubini, supply and demand forces are highly dynamic, but it is likely that the U.S. will be independent from the energy supply of the Middle East and will rise to global export levels.

Another mover for additional global supply was discoveries of oil in the Eastern Mediterranean region near Lebanon, Israel and Cyprus.

In spite of the current prospects for cheaper crude price per barrel, the threat of geopolitical surprises on the energy markets still exist. In case Israel attacks Iran, the price of oil might rise to $200 a barrel for a short time, according to Roubini.

By Chris Termeer

Chris Termeer

Chris Termeer is an oil and gas consultant, industry commentator and analyst. His book, Fundamentals of Investing in Oil and Gas provides a comprehensive overview of all aspects of the oil and gas industry, including exploration, drilling, production, storage, transportation and refining, to name but a few.

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