December 8th, 2011
08:13 PM GMT
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Abu Dhabi (CNN) - There is a milestone about to be set which is going largely unnoticed around the world. Oil will average more than $100 a barrel for an entire year for the first time.

Here in the Persian Gulf states, they call it three digit oil. Simply put, that is a number above $100.

Due to advancements in healthcare and people generally living longer, they say 60 years old is the new 40, meaning we are more youthful in age in the 21st century.

Does this apply to the oil market where $100 a barrel is the new $80 - not too hot, not too cold but just right for oil producing countries and consuming nations alike?

That was the position taken by the Secretary General of OPEC, Abdalla Salem El-Badri during an interview on the sidelines of the World Petroleum Congress in Doha, Qatar.

"$100, everyone is comfortable with it; producers are comfortable with it and also consumers are comfortable with it," said El-Badri. Then he added a little twist to the interview suggesting that importing nations are even pleased with the higher price.

"Some of the governments of the consumer nations like this price because they are generating income. They get more income than our member countries."

That is a hot button issue. When oil spiked above $125 a barrel last spring at the height of the Libya uprising when the North African country’s production slowed to a trickle, the counterpart to OPEC, the International Energy Agency, decided to release some 60 million barrels out of their strategic reserves to calm the market.

OPEC and the IEA were pointing fingers at each other about market intervention. OPEC was told it was not doing enough to prevent a price hike and the IEA was accused of price manipulation, the very thing it accuses the production cartel of.

The two organizations are going to great lengths now to smooth over their differences on demand and the level of investment needed to meet the growing level of consumption especially from China and the rest of developing Asia.

According to the IEA, demand will grow by 47 million barrels a day between now and 2035, about 1.5 times more than OPEC produces today. This will require $20 trillion of investment into oil and gas alone.

But there seems to be a silent acknowledgement in Doha that prices will only head higher in the near and medium term, helping finance that level of record investment.

I asked El-Badri: "When we have a recovery in Europe I would imagine we won’t go down in price but up in 2012 that is the likely scenario?" He simply replied: "If there is growth, there will be higher demand."

That is perhaps the most alarming bit of the 2012 and beyond scenario for importing nations.

We have witnessed anaemic growth in the U.S. and Europe, but prices remained well over the century mark all year long.

Add a tepid recovery in the West, with potential sanctions on Iran by the European Union and oil strategists suggest we could be heading much higher at the start of next year.

That is why El-Badri did not hesitate to weigh into the debate over blocking Iran's exports to Europe when I asked for his opinion.

"If you ask for my advice, and nobody asked for my advice, I would say I don't think it is wise to cut this supply to Europe because they (the 27 nations) are facing a lot of difficulty."

The Secretary General and his member countries know that if prices spike higher due to a geo-political or economic shock, then demand could plummet as it did during the banking crisis of 2008, when oil went from $147 all the way down to less than $40 in a period of six months.

El-Badri speaks to CNN in December 2009

OPEC producers will post record revenues of an estimated trillion dollars this year and they don’t want tensions with Iran and the West to spoil the party.

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Filed under: AsiaBusinessChinaEnergyEuropean UnionOil


soundoff (14 Responses)
  1. Steve

    How would this not be the norm? The price of oil = inflation? It hasn't been this way since the 21st century.
    We were quite spoiled in the past, namely 60s-90s with oil not increasing in price nearly as quick as it should have been.

    December 9, 2011 at 1:51 am |
  2. Richard in Minneapolis

    Are there any doubters out there who don't believe we are reaching the apex of the production curve? I.e. "Peak Oil?"

    December 9, 2011 at 2:56 am |
  3. Kshah

    We still have plenty of oil in the African continent, Canada too has loads of oil followed by S America, guys I feel that we are still very safe and Priuses and similar technology shall reduce our dependency.

    Our use of oil as a fuel shall reduce thereby making us more safe.

    December 9, 2011 at 3:40 am |
  4. MaryAnn

    As long as there is greedy capitalism there is going to be high oil prices. Did someone's conscious stop the theft on Wallstreet? All the Housing ripoffs? No. That's why we have federalized national forest because the loggers would have cut down ALL the tree's
    Did a conscious set all those rivers and streams on fire due to no EPA standards back in the 70's?
    No, but you would all like to go back to that era wouldn't you!

    Unregulated Capitalism will grind this economy to a complete halt and that's why oil, which is VITAL to our survival, should be run by the Government and price fixed.

    It will get to the point where only the wealthy get to drive anywhere while the actual one's who do all the back breaking labor have nothing.

    December 9, 2011 at 4:15 am |
  5. Dantx10

    The U.S. should match the price of a barrel of oil when selling a bushel of wheat. The price of wheat would change according to the price of oil.

    December 9, 2011 at 5:03 am |
  6. IAmOn€

    Yeah, of course. It will only require some investments and everything will be fine in a second. The high prices are because of the uncertain future the oil has (have we passed peakoil?). $100/barrel are bad for both EU and USA, at least it doesn't help one bit. (Forgot the debt-crisis already in both US and EU huh?)

    Come on, people are discussing how to exploit the Arctic, which are both extremely expensive and hazardous to do. Meanwhile, the destruction of nature continues unabated in Canada (tarsands) plus a gas(not oil)revolution are going on in USA with unknown longtimeeffects on nature and water -aquifers. Yeah, they are even blowing up hilltops.

    These exploits are desperate actions of a dying industry, nothing else, but before they are going down in flames they will bring in record-profits , no less greater than small countries BNP's due to high prices. Besides that, recordinvestments has already been made in "green energy" and will continue to rise. All these indicators points to a future with LESS oil, not MORE.

    I would say without doubt it is impossible to meet the projected demand, and it will never be that high, in 2030 even if Antarctic and Arctic are "invaded and exploited".

    Investors can continue to hallucinate all they want but the world – especially mature consumercountries like US/EU – are trying to move away from oil, because the prospects does really look bad for oil.

    I really don't care what a prince, politician or a IEA says, because it will never happen except in their madeup fantasy-world they were told to believe in. Because when the day ends, they are simply not interested in telling the masses; the truth.

    But the signs are everywhere. Only an idiot would ignore them.

    December 9, 2011 at 5:32 am |
  7. g

    Oil is traded in dollars. The US has devalued the dollar so the price of oil has gone up. It's simple really. It's just that you don't read about this in the west because your media covers it up. Also you use your own currency to pay for imports so you don't feel the inflationary impact as much. The rest of the world trades in the US currency so we feel the inflationary impact of a weaker dollar. When the US govt. devalues the dollar it's basically stealing from poorest people on the planet.

    December 9, 2011 at 6:29 am |
  8. ctrlz

    On the brighter side – everyone who has money – now invests heavily in alternate energy sources, batteries and electric vehicles. Soon problably oil exporters will regret their pricing policies, because the oil will not be needed at all. As for me – I will buy electric/hydrogen car as soon as someone will build an plug-in hybrid electric car (like VOLT) for a family of 5.

    December 9, 2011 at 8:02 am |
  9. major tom

    Why does everybody continue to talk about ongoing development? Nothing wrong with it, and it's necessary, however we need to steer growth away from fossil fuels for the sake of conservation and the environment. We talk out of both sides of our mouths. But we all know the "same old, same old," is the reality, and the greening of the world's production is b.s.

    December 9, 2011 at 10:31 am |
  10. eddie2010

    No, it's the new LOW.

    December 9, 2011 at 11:07 am |
  11. Bruno

    Thanks to USA for its oil wars. They have spent more fuel than any other country in last 10 years.

    December 9, 2011 at 11:40 am |
  12. coder

    Of course the oil producing country likes the current price. But for the media and the seller to say everybody likes the new outrageous price – just goes to show what money does to people's perception.

    At one point, they will run out of oil, money will be unnecessary, and religion will blame mankind.

    December 9, 2011 at 1:40 pm |
  13. reformer1

    You think this is troubling? Rent the movie "Collapse" and you will from troubled to scared.

    December 9, 2011 at 5:00 pm |
  14. us1776

    Our family has this year reduced our gasoline purchases by over 60% !

    Eliminated all unnecessary trips.

    Consolidated all shopping trips into 2 or 3 per month.

    We car pool with neighbors for various events.

    It's made a huge difference.

    December 9, 2011 at 7:36 pm |

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