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Oil expert: US overestimates future oil supplies

By Channel 4 News

Updated on 26 October 2004

A top Saudi oil industry insider has told Channel 4 News the US government's forecast for future oil supplies is a "dangerous overestimate".

Sadad Al Husseini has just retired as vice-president of the Saudi oil company Aramco. His comments could have a significant impact on a jittery oil market which has seen the price of a barrel of crude rocket to record levels over recent weeks.

Global oil markets are incredibly stretched. The price of a barrel is around $55 dollars and rices have risen by around 80% over the last year.

The key supplier is Saudi Arabia and the markets are highly sensitive to any news regarding the Desert Kingdom.

We've obtained sensitive US government estimates of how much oil the global economy will need over the coming years.

At the moment, the world uses 80m barrels of oil a day, with Saudi supplying around 9 million, around 11%.

By 2025, given huge demand rises from China, India and so on, global demand will rocket to 120m barrels a day.

And, the US government says, Saudi will supply 22m barrels a day, around 19 per cent.

The Saudis very rarely speak publicly about future oil capacity but there are signs the Kingdom is worried their fields are being pushed too hard.

Al-Husseini has just retired as Head of Exploration at Aramco and he told us in a rare interview, that estimates of future global supplies from the EIA, the US government's energy think tank, are simply too high.

He also said he didn't see a price move below $50 a barrel any time soon.

Al-Husseini's opinion is a view that is growing in the oil markets, but which no-one wants to admit, that population growth and the emergence of China and India means oil prices are now going to be structurally higher than they have been.

It's also a view articulated by Matthew Simmons, one of the industry's leading financiers, and a former energy advisor to America's Vice-President Dick Cheney.

He says the main reason the markets won't wake up to permanently high oil prices is what he calls "group think" and "conventional wisdom". He's told us in an exclusive interview that the only way for oil demand, and thus prices to fall, is a global recession.

Al-Husseini and Simmons are two of the most senior figures in the global oil industry.

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