Royal Dutch Shell Group .com Rotating Header Image

Financial Times: Oil price showdown

By Paul Betts, Chris Hughes and Peter Smith
Published: November 6 2007 02:00 | Last updated: November 6 2007 02:00

Oil is now flirting with $100 a barrel – a level never seen before. Governments and industry leaders are fretting and some, such as the former French energy regulator, are even suggesting that the price could hit $150 over the next decade.

But the panic may be overdone. In fact, we have been here before. Back in 1979-80, oil prices hit historic highs of around $40 a barrel which when adjusted for inflation is still slightly above today’s levels.

That turned out to be a bubble and prices collapsed five years later. The cycles have continued since and today’s exorbitant price increases may be no more than a simple replay of past cycles.

Highly regarded analysts, such as Morgan Stanley’s Eric Chaney, are predicting that oil could fall again below $50 a barrel. That may sound absurd in the current climate but other analysts at Lehman Brothers and Oppenheimer are also warning of a sharp plunge.

A warm winter could have a dramatic effect on prices, never mind the consequences of a slowdown in US economic growth or an easing of geopolitical tensions. Bears and bulls are poised for a showdown.

[email protected]
Copyright The Financial Times Limited 2007

This website and sisters royaldutchshellplc.com, shellnazihistory.com, royaldutchshell.website, johndonovan.website, and shellnews.net, are owned by John Donovan. There is also a Wikipedia segment.

Comments are closed.