Adam Sieminski, the former head of the US Energy Information Administration, cautioned Tuesday that a "decade of disorder" could be looming for the global oil market as declines in long-term supply projects and a host of other factors cause potentially severe market imbalance.
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"We're facing a lot of uncertainties, I think, in a lot of different areas," Sieminski said during a panel on oil price trends at CERAWeek by IHS Markit.
A wave of global populism, trade wars and geopolitical issues could all complicate market fundamentals, Sieminski said.
Related Capitol Crude podcast featuring Sieminski: It's not the US EIA that's crazy; it's oil markets that are
In addition, he said while current oil prices in the range of $55/b to $60/b could be enough to boost US shale oil production, it may not be enough to incentivize conventional oil production, which makes up the bulk of global supply.
"That might bite us at some point," he said.
Sieminski said he believes average US breakeven prices are about $55/b to $60/b, higher than many analysts and producers which put US breakevens at about $50/b or below.
While prices between $50/b and $60/b may be profitable for US producers this decade, it may not be enough to keep supply at levels to meet demand, a frequent theme at this year's conference.
Still, Sieminski said supply growth could come from a return of Nigerian or Libyan oil to the market, for example.
"Supply gaps generally tend to get filled by something ... it just depends on timing," he said.
Sieminski, who is currently the James R. Schlesinger Chair for Energy and Geopolitics at CSIS, was EIA administrator from June 2012 to January 2017. As head of the EIA, Sieminski often suggested that he needed to be cautious in his public statements, joking that he was one controversial policy remark away from the private sector.
At CERAWeek, Sieminski seemed to take a less cautious tone, discussing both a border adjustment tax being weighed as part of a Republican tax reform effort and the Trump administration's ongoing efforts to roll back fuel economy standards.
The Trump administration is expected to roll back fuel efficiency targets of 54.5 mpg for model year 2022-25 for cars and light trucks. Sieminski said Trump may also target diesel truck standards for repeal. The rollback of these standards could have major implications for supply and demand fundamentals in the next decade, he said.
"Many things are going to be left up to consumer demand," Sieminski said.
He also said it was unclear what impact the deal between OPEC and non-OPEC producers would have on overall market balance going forward.
He called the landmark agreement "another experiment" to see if supply and demand could be balanced in the short term.
--Brian Scheid, firstname.lastname@example.org
--Edited by Jason Lindquist, email@example.com