$100 oil price unattainable

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TEHRAN. KAZINFORM - Volatility in oil prices has given rise to speculations about the fate of black gold in the current year, IRNA informs.

The commodity traded at over $100 per barrel in June 2014 although it plunged below $50 in January.

Hassan Khosrojerdi, head of the Iranian Oil, Gas and Petrochemical Products Exporters' Association, commented on the fluctuation in oil prices in an interview with the Persian daily 'Arman'.

Responding to a question by the daily on what factors nudged the oil price rise, though it collapsed at January end, Khosrojerdi noted three reasons which contributed to an increase in oil prices. Firstly, he said, some US oil shale projects ran out of business as declining prices made them uncompetitive in view of high drilling costs. Since such projects were driven out of the market, the price of crude rose after six months of progressive decline. Only if oil prices remain over $70 will shale oil drilling be competitive.

Secondly, he said, non-oil producing countries have invested in the oil industry, which resulted in a drastic decline in global oil prices, but cooperation among certain oil firms was responsible for the hike in crude prices.

Last, but not not the least, the global oil market saw six-month lows due to politically-motivated reasons. Fortunately, profiteers have been caught off guard by speculations about increased cooperation among oil producers, which reversed the falling prices.

On whether he expects crude prices to shoot up to $100 a barrel again, Khosrojerdi said that the next two years will see oil prices hover between $70 and $80 per barrel, but they will not reach $100.

Replying to a question on reasons why he thinks black gold will not reach the peaks it witnessed in June 2014, standing at over $100, he said, since oil producing nations are helping industrial countries hit by economic crisis, crude prices will unlikely shoot up to such rates.

On whether he believes that a host of conspiracies have kept oil prices down, the official said, Saudi Arabia might have conspired to bring prices down. Likewise, the US could be considered as the accomplice to the Arab nation to help it achieve its objective.

However, we should keep in mind that the Saudis have pushed prices down to undermine oil drilling from shale projects and secure their own interests.

On his opinion that the plummeting oil prices have nudged officials to wean the national economy off petrodollars, he said that it is desirable to steer the economy away from oil-based revenues. Experts have always called on governments to adopt strategies to do away with dependency on oil. The incumbent administration should cut expenditure and take big steps to end oil dependency.

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