What Direction for Oil Prices?
The price of crude oil goes up and up -most recently driven by hurricane Katrina, which had a catastrophic effect on the US oil industry, and was followed by hurricane Rita. In September 2005 the price of Brent crude reached a new record at US $ 66 per barrel. The agreement by member states of the International Energy Agency (IEA) to release crude oil and petroleum products from their strategic reserves has brought prices down again slightly, but it is very questionable whether this will calm the upward drive for long. Crude oil prices have been rising continuously since 2003, largely as a result of increased demand, particularly from China. The high level of capacity utilization in oil extraction creates risks that are reflected in rising prices on the forward markets. The rise in oil prices since 2003 is around US $ 30 per barrel, and this is probably mainly due to short-term effects and resultant speculative buying. In view of the high stocks of oil the current prices do seem excessive. Sooner or later they will normalize on a lower level, but in the long term higher prices for oil than the average of recent decades must be expected. Model simulations up to the year 2025 show that in a scenario of adequate resources real oil prices (price base 2000) of between US $ 30 and US $ 40 per barrel are to be expected. In a scenario of more limited resources, however, prices could rise to just under US $ 80 per barrel in real terms, which is up to US $ 160 nominally.
Volume (Year): 1 (2005)
Issue (Month): 33 ()
|Contact details of provider:|| Postal: |
Web page: http://www.diw.de/en
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:diw:diwwrp:wr1-33. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.