OPEC kingpin Saudi Arabia is fixed to keep oil prices trading around current levels, one strategist related CNBC Monday, but a total shutdown in Venezuelan production could ultimately prompt crude futures to skyrocket toward $100 a barrel.
Costs in the oil market have been steadily rising since last year, with far-reaching benchmark Brent climbing to multi-year highs of $80 a barrel earlier this month. An upswing in gross futures has largely been driven by OPEC-led production cuts and sapid global demand.
However, more recently, crude futures hold slipped amid renewed fears of an oversupplied energy market.
“I over recall that Saudi Arabia, the rest of OPEC and Russia have won their objective of clearing this industry overhang from the oil Stock Exchange,” Bob Parker, investment committee member at Quilvest Wealth Management, censured CNBC’s “Squawk Box Europe” Monday.
“I think what they are active about is that they ideally would like to avoid a treenail in the oil price, let’s say towards $100 a barrel, because they are very irascible to the fact that a spike would then lead to a generalized extensive downturn,” he added.
In light of energy market concerns over potency supply shortfalls, Saudi Arabia and Russia said Friday that they were discussing the chance of raising oil production by some 1 million barrels a day. This, combined with info of an uptick in U.S. crude production, prompted steep declines in crude time to comes last week.
Brent crude traded at around $75.38 a barrel on Monday morning, down 1.4 percent on the period, while U.S. WTI stood at $66.72, down around 1.7 percent.
Parker ventured that while Saudi Arabia had a “very strong vested charge” in keeping crude futures at around $70 to $80 a barrel, a rouse toward $100 a barrel could soon occur in the event of a “absolute collapse” in Venezuelan crude production.
He added the prospect of a dramatic slowdown in Venezuela’s oil shaping remained “entirely possible.”
Venezuela’s oil output has taken a sharp expose lower in recent years, with the country facing an economic emergency of chronic food shortages and spiking inflation.
Crude production in the Latin American assert has dropped to around 1.4 million barrels a day in recent months — a spectacular crumple of nearly 40 percent since 2015.