Oil Could Hit $400 Per Barrel, Expert Says
A commodities market expert is predicting economic collapse in the U.S. within the next two years due to the oil commodity market and a shortage of diesel fuel, the Washington Examiner reported.
Philip K. Verleger is a senior adviser at the Brattle Group, a global consulting firm. Verleger released a July analysis, first reported on by the Washington Examiner Sunday, from his independent firm PKVerleger LLC predicting the apocalyptic scenario and oil prices around $200 a barrel in 2020. Prices could rocket even higher, doubling to $400 a barrel or even higher.
The collapse became only a matter of time after the United Nation’s International Maritime Organization (IMO), created in 1914, ruled in 2016 that all ocean vessels must switch to burning low-sulfur diesel fuel. The ruling affects most U.N. countries, Verleger said.
“The economic collapse I predict will occur because the world’s petroleum industry lacks the capacity needed to supply additional low-sulfur fuel to the shipping industry while meeting the requirements of existing customers such as farmers, truckers, railroads, and heavy equipment operators,” Verleger wrote. “Quite simply, low-sulfur diesel fuel or gasoil is … essential for twenty-first-century economies, governments, and militaries to function.”
The IMO’s rule cut access to fuel in the short and mid-term by forcing half the world’s refineries to close down because they are not equipped to produce the low-sulfur fuel demanded, Verleger said.
The price per barrel of oil has fluctuated around $65 to $75 for months, but that price may jump as high as $140 as President Donald Trump seeks to reimpose sanctions on Iranian oil, according to Iran’s representative to the Organization of Petroleum Exporting Countries (OPEC) Hossein Kazempour Ardebili. (RELATED: OPEC Reaches Decision On Oil Production)
The Trump administration, worried the stability of domestic oil markets after sanctions, has been lobbying Saudi Arabia to boost oil production after OPEC, which Saudi Arabia and Iran are both members of, decided to relax self-imposed oil production cuts.
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