Crude prices may continue their slide, but a top government energy economist predicts the price of Brent oil will rise to $40 a barrel by the end of this year, and to $50 a barrel by the end of next year.
“Can we have $30 a barrel oil continuing indefinitely into the future?” Adam Sieminski, head of the U.S. Energy Information Administration, asked at a hearing of the Senate Energy Committee in Washington on Wednesday. “And I think the answer to that is no.”
Sieminski, though, added a big caveat to his forecast: “The uncertainty in crude oil prices as we look out over the next year or two is very high.”
One of the unknowns is how much Iran will ramp up production. Initial forecasts are half a million barrels a day. Sieminski says that could rise above 3 million barrels a day by the end of the year. Oil market analyst Antoine Halff of Columbia University agrees Iranian leaders are eager to sell more.
“But they’ve also said they don’t want to crush the market, don’t want to flood the market too quickly with too much oil and cause the price to fall even further,” he says.
It’s also unclear, Halff says, how much international investment will flow to Iran to improve its oil infrastructure.
Energy Committee chairman Lisa Murkowski, R-Alaska, warned at the hearing that she’ll be fuming about U.S. Iran policy all year.
“This whole discussion about Iran is so galling, as a representative from a state that has enormous potential,” she said. “We will as a country tell Iran, ‘go ahead, produce more,’ while at the same time we’re going to continue locking up our potential.”
Sieminski says he expect U.S. crude production to fall through most of 2017. He says it’s price, not policy, that is driving domestic production down.