What if owing to reduced investment and cost cutting crude oil hit $200 a barrel by the end of the decade?
Some might call this political theater. But Claudio Descalzi, the chief of the big Italian oil firm, Eni, just posed that question.
Saying a a lack of production in four or five years along with continued cost cutting and lower capital expenditures "would create a condition for a dramatic rise in oil prices," he floated the number $200 a barrel.
Descalzi referred to Opec's need to stabilize prices by cutting back production, something Opec officials contend ain't in the hydrocarbon deck any time soon as crude traded below $50 a barrel, near a six-year low.
Opec defended it stance, claiming its not directed "at any one country." But that's a meal U.S. fracking firms may have a difficult time digesting.
Stories on the Internet are popping up routinely now about who--Saudi Arabia or U.S. fracking firms--will toss in the stained oil rag first.
News about jobs cuts and reduced rig counts too are almost daily fare. This is theater, but it's also the stuff of huge profits sometime, somewhere down the oil patch lane.
Speaking to Reuters at Davos, Descalzi compared Opec to central banks and the need to create and maintain price stability. With all due respect to Descalzi, given what we really know about central banks, it was probably a poor choice of metaphors.
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