Oil stash: a planner for state-owned Saudi Aramco says energy experts have consistently over-estimated future world oil demand
Aramco man points finger at estimates
Oil markets are well-supplied despite record-high prices and experts have consistently overshot their estimates of future oil demand, Yasser Mufti, a corporate planner at Saudi state-owned oil company Saudi Aramco, said today.
The White House has said tight supplies are behind record-high prices near $110 a barrel and called on Opec to boost output.
Yasser Mufti reiterated Saudi Arabia's insistence that market prices are disconnected from fundamental factors like supply and demand.
"On the fundamental side there is not enough to explain this price," Mufti told reporters on the sidelines of a Washington DC oil conference hosted by George Washington University and the World Bank. "There is a statistically significant element of non-fundamental contribution to that price."
Mufti pointed to recent data from the International Energy Agency (IEA) that shows global oil inventories rising.
"That means the market is well-supplied," Mufti said. "These prices are going to have an impact on the economy and on demand."
In his presentation, Mufti pointed to a wide range of estimates on the 2010 "call" on Opec, and said billions of dollars in development costs could be wasted if planners miss the mark.
Estimates by the IEA, Opec and US Energy Information Administration of the implied demand for Opec oil in 2010 range from 36 million barrels per day to about 41 million bpd. The difference - about 5 million bpd - would cost about $45 billion to build, using a conservative development cost of about $10,000 per barrel, Mufti said, Reuters reported.
Oil analysts have consistently over-estimated the need for Opec oil, Mufti said, pointing to a 1996 estimate from the EIA that Saudi Arabia would need to pump about 21 million bpd in 2015 to keep markets balanced. A 2007 estimate from EIA put the 2015 number closer to 15 million bpd.
"That is quite a range or a reduction and you see the bias is toward the upside," he said.