BLOG: Why the long-term price of oil will be at $30/barrel or lower

LONDON (ICIS)–Click here to see the latest blog post on Asian Chemical Connections. Conventional opinions about oil prices – and let’s face it they have already been wrong about a post OPEC+ rebound in prices – have it that the long-term price of oil must be well above production costs. Production costs for 85% of today’s crude is just $15/bbl. These opinions are built around the notion that the laws of supply and demand are unchanging, like the laws of nature. But the laws of supply and demand do change, in line with shifts in economics, societies and technologies. Long before COVID-19 (novel coronavirus disease), demographics and the rise of sustainability pointed to a long-term oil price of $30/bbl or lower. The tragedy of the virus has added to the momentum pushing markets to this level.

Editor’s note: This blog post is an opinion piece. The views expressed are those of the author, and do not necessarily represent those of ICIS.