West Texas Intermediate oil may reach $130 a barrel within the next six months, said John Hofmeister, founder and chief executive officer of the advocacy group Citizens for Affordable Energy.
“Demand continues to rise in Asia and whether we use less or not doesn’t matter,” Hofmeister, a former executive at Royal Dutch Shell Plc (RDSA), said in an interview on CNBC. “Price is going up because supply can’t keep up with demand.”
U.S. oil and natural gas production has increased slightly because of shale output, he said.
“It’s a trickle when we need a river of new supply,” Hofmeister said.
Oil futures for March delivery on the New York Mercantile Exchange touched $105.44 today, up $2.20 from the Feb. 17 close and the highest price since May 5.
Hofmeister, former president of Shell Oil Co., the U.S. unit of Royal Dutch Shell, questioned the availability of spare production capacity maintained by the Organization of Petroleum Exporting Countries.
“I think OPEC is about maxed out,” he said during the interview. “When people talk about spare capacity at OPEC, I just don’t see it. I don’t see it coming through and I’m not sure it’s there,”.
Hofmeister said Western countries will suffer economically because of high gasoline and diesel prices by mid-year.
“The bad boys in the Persian Gulf are going to play havoc,” he told CNBC. “They’d love to see the West suffer economically. I believe by summer we will be suffering economically. Iran is in the mix of all this.”
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