By Yousef Saba
FUJAIRAH (Reuters) – The deputy CEO of commodity trader Mercuria, Magid Shenouda, said on Wednesday that oil could go to $100 a barrel if the situation in the Middle East escalates.
“I don’t think there are that many analysts that believed that it was going to go to $100, in a normal circumstance. I think the events that have happened recently, I think that puts a great cloud (over) where things could go, because the market is not pricing much of a conflict,” Shenouda, also Mercuria’s global head of trading, said at an industry conference in Fujairah, the United Arab Emirates.
“Volatility went up but the price action was actually quite muted – $3 a barrel is not that significant – so the market is fading any real action. But there is a high probability that this could escalate, and if it does escalate, then I think we can see $100.”
Kieran Gallagher, Vitol Bahrain’s managing director, echoed the sentiment.
“The Q4 outlook on demand is quite healthy. So there’s an argument to say we’ll still be at a healthy price set. What we need to remember is the run from $85 to $95 happened quite quickly,” he said.
“Fundamental reasons why we might hit $100, that’s questionable – I think we would need to see a geopolitical event to perhaps hit that. But the demand outlook is certainly healthy enough to keep us around the $90 price set.”
Shenouda also said it was difficult for the oil industry to access capital.
“I don’t think inflation is under control. There are people out there trying to raise capital at 20-plus percent. This is not sustainable. And those are oil producers,” he said, adding that the $260 million IPO of Seacrest Petroleo this year “nearly failed.”
“There is not capital that’s available for this industry.”
(Reporting by Yousef Saba; editing by Louise Heavens)
