A worsening of Europe’s debt crisis or an escalation of US-driven tensions against Iran over the latter’s nuclear program would negate present oil price projections, Mike Wittner, the head of oil-market research at Societe Generale SA in New York, said.
“Saying the market will be broadly range-bound may sound boring but there are big risks out there,” said Wittner, the second-most accurate forecaster for Brent among analysts ranked by Bloomberg in the past eight quarters. “The risk of a euro-zone explosion isn’t a little bearish, it’s a lot bearish. The risk of an escalation of the Iranian situation isn’t a little bullish, it’s a lot bullish.”
Iran pumped 3.56 million barrels of crude a day in November standing second to Saudi Arabia among members of the Organization of Petroleum Exporting Countries.
“Iran remains the wild card,” said Chip Hodge, who oversees a $9 billion natural-resource bond portfolio as senior managing director at Manulife Asset Management in Boston. “If conflict rears its ugly head, prices will surge.”
The collapse of Libyan exports and field maintenance in the North Sea reduced supply and helped increase prices this year. Libyan output rose 155,000 barrels to 500,000 a day in November, the highest level since February, the survey showed. Production in the North African nation had tumbled from 1.585 million barrels a day in January, the last month before an uprising against the government of Muammar Qaddafi disrupted output.
“But, the market is still tight even with Libya coming back,” Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, said.