The price of petrol is set to fall in the next two weeks despite a warning from the IMF that oil could double in price over the next decade.
Maxol chief executive Tom Noonan said he expected the price that consumers pay for diesel and petrol at the pumps to continue to fall.
The price of oil has been falling on the back of fears about the European debt crisis spiralling out of control and depressing the world economy. Oil fell below $94 (€73) a barrel in New York for the first time since December as the debt crisis worsened. Saudi oil minister, Ali al-Naimi said prices should fall further. Saudi Arabia is optimistic it will discover more oil and gas in the Red Sea and increase recovery rates, al-Naimi said, adding the country plans to boost the amount of crude it can extract from its biggest producing fields to 70% from 50%.
Crude prices are high because of global economic instability, and the EU sanctions against Iran that take effect from Jul 1 are already factored in, said Total CEO Christophe de Margerie. Hedge funds cut bullish oil bets by the most in three years as concern over Europe’s financial woes sent prices tumbling.
“It’s about Greece and a potential exit from the eurozone, which more and more people expect within months or even weeks,” said Hannes Loacker, analyst at Raiffeisen Bank International.
“And then it’s about fundamentals, with US crude stocks high and demand in the developed world still weak,” he said.
Mr Noonan was happy to hear the price of oil should stay below $100 as supply outweighs demand.
Consumers have to bear in mind despite the falling price in internationally traded oil, it still takes about two weeks for the savings to trickle down to the pumps, he said, adding that more than half of the cost paid by motorists was as a result of taxes.
Despite the positive news, an IMF working paper predicts a doubling of oil prices in the next decade.
IMF economists stated: “Our prediction of small further increases in world oil production comes at the expense of a near doubling, permanently, of real oil prices over the coming decade. This is uncharted territory for the world economy, which has never experienced such prices for more than a few months.”
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