KUALA LUMPUR (Aug 20): Crude oil price could potentially reach US$100 per barrel by year-end or early 2019 due to a significant reduction in Iranian output and lower spare capacity due to geopolitical risks, said global information provider IHS Markit today.
Its Vice President for Oil Markets and Downstream, Victor Shum, said there could be a significant disruption to the production capacity this year following fresh sanctions imposed on Iran by the United States, while also aimed to cut Iranian oil export to zero.
Another factor contributing to the supply constraint in the market was tight output in Venezuela and Libya, he added.
However, Shum did not expect the oil price to stay high for long as it would create economic headwinds, and noted that the oil price would eventually retreat to US$60 a barrel by end-2019.
"We do expect that there will be less oil from Iran hitting the market later this year. I do not expect the problem will be solved in a few months. What that means is that there would be less crude supply.
"Quite likely Saudi Arabia and other major producers within the Arabian gulf region such as Kuwait and the United Arab Emirates may raise their output to replace the oil loss from Iran," he told reporters on the sidelines of the Asia Petrochemical Industry Conference 2018 (APIC 2018) here today.
It was reported that the US has reimposed sanctions on Iran that it lifted two years ago.
The new sanction is intended to put a grip on Iran's behaviour beyond nuclear control.