Western sanctions against Russia, coupled with ongoing political instability in Libya and the advance of ISIS militants in Iraq, could leave the global oil supply exposed and push up oil prices to $150 per barrel, former BP chief Tony Hayward has warned.
The former CEO of BP and now chairman of Glencore Xstrata said the recent boom in US shale production has painted an unrealistic image of the world’s global oil supply, and created a false sense in energy security.
“The world has been lulled into a false sense of security because of what’s going on in the US,” Hayward said in an interview with the Financial Times.
The hydraulic fracturing boom in the US began in 2008 and has increased US crude output by 60 percent, but Hayward warned it could wane.
“When US supply peaks, where will the new supply come from?” Hayward said.
Instability in oil producing countries in the Middle East, such as Libya and Iraq, in theory would have driven up oil prices to $150 per barrel, had it not been for the new supply from North America.
So far, Brent crude has fallen from about $108 a barrel at the start of the year to about $97 today.
Hayward said oil supplies from the North Sea and Alaska are nearing maturity, and the world oil supply is dependent on new wells in places such as Russia, Iraq, and Canada.
Rosneft’s Bazhenov field may be even larger than the North Dakota Bakken shale shelf, which currently produces 1 million barrels of oil per day and has brought about the shale revolution in the America.
Source: RT, 2014