The $100 dollar a barrel draws closer. Middle East members of the oil cartel Opec are under pressure for an immediate rise in production, after a warning from investment bank Goldman Sachs that prices could hit $95 a barrel this year.
On the energy markets yesterday, a wave of speculative activity pushed Brent crude to $78.40 before profit taking saw it fall back. Goldmans said Opec production was a million barrels a day down on last year while demand is strong.
“We believe an increase in Saudi Arabian, Kuwaiti and United Arab Emirate production by the end of the summer is critical to avoid prices spiking above $90 a barrel this autumn,” the investment bank said.
“Our estimates show that keeping Opec production at current levels and assuming normal winter weather, total petroleum inventories would fall by over 150m barrels or 6.5% by the end of the year, which would push prices to $95 a barrel with a demand response.”
Opec sought to calm increasingly frenzied global energy markets when it predicted world demand for oil would grow only modestly in 2008. It downplayed the need for extra production, citing greater energy efficiency, higher taxes and conservation.