LONDON (Reuters) - Oil’s spurt to a record above $135 last month from around $100 at the start of 2008 may have been influenced by a growing feeling that oil supplies might be peaking, the head of oil explorer Cairn Energy said.
Cairn’s Chief Executive Bill Gammell told the Reuters Global Energy Summit on Friday that there was growing awareness in the market about “peak oil”, a theory which says that global production is near an apex after which it will decline sharply.
“The move from $100 to $130 was actually a period when people started to look at and wonder more a bit about the peak oil theory,” Gammell said.
The theory of peak oil was first suggested by geoscientist Marion King Hubbert, who in 1956 predicted U.S. oil production would peak between 1965 and 1970.
More recently, Matthew Simmons, the chairman of a Houston-based energy-focused investment bank, said in late 2006 that the peak may have occurred in December 2005.
Simmons, the author of a book called ‘Twilight in the Desert’, has long warned that leading producer Saudi Arabia may not have as much reserve capacity as it claimed. Saudi reserve data are classified as state secrets.
Cairn’s Gammell said it was a “struggle” to see where major production volumes would come from going forward, while demand for oil in Asia led by China and India was only “going to go one way”.
“Which leads me to suspect that prices are likely to remain firm ... I would say that from a long term view, I would be bullish on oil prices. Where they will be I don’t know,” Gammell added.
Reporting by Santosh Menon
Our Standards: The Thomson Reuters Trust Principles.