U.S. oil prices stabilized on Monday at $60 per barrel, but remain in bear market territory after registering the longest losing streak in 34 years and wiping out 2018 gains.
Former Shell Oil president John Hofmeister says prices will soon rebound.
“I don’t think we can really sustain this low price and I think we won’t,” he said during an interview on FOX Business’ “Varney & Company.”
Hofmeister said U.S. sanctions against Iran are mostly to blame for the 20 percent decline over the past month, however the Trump administration granted temporary sanction waivers to eight countries purchasing crude from the country easing the impact of full sanctions.
This action removes the expectation that one or two million barrels of oil would come off the market, according to Hofmeister.
“Suddenly, you’ve got this expectation of shortage that’s gone away and so for a short period of time there’s some relief from that,” he said.
Hofmeister said the oil market will find its stability when it reaches $80 a barrel.
“I think equilibrium is in the eighty dollar range in today’s world plus eighty dollars will give some certainty to the offshore developments that I think we need over time,” he said.
On Monday Saudi Arabia’s oil minister said the Organization of the Petroleum Exporting Countries (OPEC), and other producers agree, that it’s necessary to reduce output next year by 1 million barrels a day.