The only thing worse for OPEC than very low oil prices is very high oil prices, according to Erik Sondena, manager of the sub-surface department at Norwegian energy company Petoro on Wednesday.
Sondena told Anadolu Agency that in the short to medium term, OPEC seems to be intent on depending on a floor of at least $40 per barrel, whereas the U.S. shale break-even prices of about $50 appears to be the ceiling.
"If demand growth keeps the steady pace of recent years, and upstream investments globally remains subdued, at some point the U.S. shale alone will probably not be enough to cover the resulting supply gap, and we might get a theme of recurring price spikes," he said.
He added that, "however, as the rapidly growing investment in renewable energy and alternative transport technologies, such as electric vehicles, in the last 10 years has shown: the only thing worse for OPEC than very low oil prices, is very high oil prices."
Sondena asserted that it is unlikely that there will be a return to $100 per barrel in oil prices for a sustained period.
According to Sondena, in the longer term, it will be interesting to see if and when demand growth slows substantially or even goes into decline, and how that will affect the competition between OPEC and other higher cost producers and in turn how it will impact pricing dynamics.