Two factors, one domestic and the other international, will drive up the price of oil, a former Shell Oil president told FOX Business on Monday.
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John Hofmeister, who ran Shell Oil USA from 2005 to 2008, told Charles Payne that there "are two dynamics that are forcing the price of oil up and I think they are unrelenting for the near and medium term."
The first dynamic has to do with recent developments in the U.S.
"During the low price era we pushed out all kinds of investment spending, all kinds of new capital did not go into producing new reservoirs, new oil fields," Hofmeister said.
"Instead we were living off what we had because there wasn’t the capital to spend. And so we are going to suffer the effects of not having invested over the last three to four years the way we had previously."
Then the second dynamic has to do with OPEC, which Hofmeister said is in "disarray."
"Who can rely on Libyan oil? Who can rely upon Nigerian oil, and who can rely ultimately on Iranian oil when the sanctions take effect?" he asked.
"The OPEC countries themselves are going to run short, I believe, of their own production. Although the Saudis say they’ll jump in, in principle I believe they intend to but whether that actually materializes we don’t know."
"I think we’re really on the edge of seeing a significant rise in oil prices."