- Former BP chairman says `too much oil' on global market
- More exports from Iran may push crude down from 12-year lows
Oil prices are likely to stay at current levels of about $30 a barrel for some time as the energy market weathers a “supply shock,” Glencore Chairman Tony Hayward said.
There’s “too much oil” and demand growth is slowing, Hayward, who was chief executive officer of BP Plc from 2007 to 2010, said in an interview on the sidelines of the World Economic Forum in Davos, Switzerland. Glencore, based in Baar, Switzerland, is one of the world’s largest oil trading houses, along with Vitol Group and Trafigura Pte Ltd.
Hayward’s view matches a growing consensus in the oil industry with Brent and West Texas Intermediate crudes settling below $29 a barrel Tuesday. Brent, the global benchmark, slipped to $27.67 in intraday trading Monday and WTI dipped to $28.21 Tuesday, both levels not seen since 2003.
More production from Iran may add to the glut. With nuclear sanctions against it lifted, the Middle East country announced plans to boost output by 500,000 barrels a day.
In response, analysts have cut first-quarter adjusted earnings-per-share forecasts in the past month for some of the world’s largest energy companies, including Exxon Mobil Corp., Chevron Corp., Royal Dutch Shell Plc, Total SA, Eni SpA, Statoil ASA and Repsol SA, according to estimates compiled by Bloomberg.
On Wednesday, Shell will become the first major oil producer to announce annual earnings, ahead of schedule as it enters the final stages of its plan to buy BG Group Plc in the industry’s biggest deal in years.
Hayward said oil demand growth, which was the most in two decades in 2015, would slow this year. The International Energy Agency on Tuesday said that oil consumption will increase this year by 1.2 million barrels a day, after rising by 1.7 million in 2015.
The Paris-based IEA said in its monthly report the "the oil market could drown in oversupply," pushing prices down further. It cited a potential demand slowdown from the mild Northern Hemisphere winter and Iran’s return to the energy market.