WASHINGTON (Sputnik) – Oil prices will likely settle between $50 and $60 a barrel in the next year as prices reach lows not seen for six years, former US Assistant Secretary of Energy Chuck McConnell told Sputnik on Thursday.
“Ultimately, I believe the settling area over the next 12 months should be something between $50 and $60 a barrel,” McConnell said.
McConnell expects oil prices to continue to decline before moving higher.
“I would not be surprised to see oil continue to fall, perhaps to as low as $30 a barrel,” he asserted.
Oversupply and high oil reserves levels amid low demand due to economic uncertainty in China and other world economies has contributed to the price decline.
However, McConnell suggested prices could be driven higher by a number of exogenous factors, including instability in the Middle East.
“Oil prices around the world can be affected very dramatically, very quickly by instability in the Middle East, by some type of an act of aggression, or any other non-market impacts. And when that happens it is anybody’s guess how much more expensive oil would become very quickly,” McConnell said.
"As world supply continues to look much stronger than the demand, competition is much more difficult and I do believe that this current dynamic is likely to have the United States begin to look much more at exporting gas and oil," McConnell said.
The US implemented the oil export ban in response to the Arab oil embargo in the 1970s, a policy that McConnell said is "really is not appropriate for the dynamics that we have today."
"I think that will drive policy change in these conversations already in Washington," McConnell said.
Media reports indicate the US Congress could vote as early as September on lifting the ban.
According to the International Energy Agency (IEA), global oil prices will fall further in 2016 in response to decreased demand.
