Oil prices won’t drop on increased supply anytime soon

Attendees at World Energy Congress told $150 oil prices could happen

By Dave Hannon -- Purchasing, 11/16/2007 8:55:00 AM

Rex Tillerson, chairman and CEO of Exxon Mobil Corp., said oil buyers expecting prices to drop soon on increased supply are going to be sorely mistaken.

Dow Jones reports that Tillerson told the World Energy Congress in Rome this week that an increase in oil supplies to bring down record prices may take a couple of years.

"Clearly the price level reflects tightness in supply today, but there are other factors at work," Tillerson said, pointing out that despite high prices demand for oil has not dropped.

"It is not a resource problem. The world has plenty of oil," Tillerson said at the conference.

Also at the World Energy Congress, Odein Ajumogobia, the minister of energy for Nigeria, told Thomson Financial News that “Price levels are not stable, and they have not been stable for the last several months, but that is not the result of a lack of supply.”

Ajumogobia says political issues, refinery constraints and a weak dollar have all worked to push oil prices up—not a lack of supply.

Kuwait-based consultant Usameh Jamali told attendees at the conference oil prices could go as high at $150/barrel. As the Guardian reports, Jamali said, “People in the market believe that $100 is sustainable and there is continued upward pressure...we should be expecting some downward pressure in a couple of years [only].”

See also: High prices are reducing demand for crude oil