US President Barack Obama and the heads of ‘Big Oil’ have repeatedly clashed over domestic tax and environmental regulation policy, but agree on one thing: the fear of conflict with Iran is behind the recent surge in oil prices.
Recently Obama lambasted “too much loose talk of war” with Iran over its nuclear program, which has seen prices rise over $20 a barrel so far this year.
“We can’t just drill our way to lower gas prices – not when we consume 20 percent of the world’s oil,” Obama said. With domestic production – powered by a surge drilling in North Dakota and in deep water offshore – at eight-year highs, his argument is reasonable.
“Supply and demand is fine,” agrees Rex Tillerson, CEO, Chairman and President of ExxonMobil. “As I look at just the supply and demand fundamentals, I would not expect to see prices reach that [$5] level. Again, the unknown in here is if the markets view of the political risk, if the rhetoric gets more heated, if there’s a problem someplace else in the world that flares up, then certainly it can drive these prices up further.”
Despite presiding over a renaissance in US oil and gas exploration, in which the national rig count has – according oil services giant Baker Hughes – increased by 50% and production increased by 20%, Obama remains unpopular with several oil companies.
The remarks preview the likely statements from a meeting of key oil consumers and producers in Kuwait today. Even prominent oil producers in the gulf which are benefiting financially from high oil prices are worried.
Saudi Oil Minister Ali al-Naimi and OPEC Secretary General Abdullah al-Badri are set to tell the International Energy Forum they are concerned about price volatility, as concerns mount that should a conflict with Iran disrupt oil supplies, other OPEC producers would be unable to fill the supply gap.
