(Bloomberg) -- Oil’s rise to $80 a barrel is stoking concerns that the price rally will erode demand, but OPEC’s giants so far aren’t worried.
Crude surged above $80 a barrel in London for the first time since 2014, as global supply tightens and the U.S. moves to restrict oil exports from Iran.
“At $80 per barrel, there will be some impact on demand," warned Patrick Pouyanne, chief executive officer of French oil explorer Total SA. The problem could worsen if Iran’s exports are curbed later this year. “I wouldn’t be surprised to see $100 per barrel in the coming months,” he said in Washington Thursday.
Pouyanne’s comments echoed concerns raised by both the International Energy Agency and India’s petroleum minister this week.
The IEA on Wednesday warned that demand is at risk of being eroded in the second half of this year thanks to the price rally that’s been orchestrated by Saudi Arabia and allied oil producing nations including Russia.
Indian Petroleum Minister Dharmendra Pradhan relayed similar concerns during a phone conversation with his Saudi counterpart, according to Pradhan’s tweets. India, the third-largest consumer of oil after the U.S. and China, would be especially hard-hit if prices keep rising.
Pradhan said Khalid Al-Falih assured him that Saudi Arabia and other producers will ensure supplies are sufficient to offset any shortfalls and maintain reasonable prices.
Separately, Al-Falih and United Arab Emirates Energy Minister Suhail Al Mazrouei said recent moves in oil prices have been driven by geopolitics and that global supply remains ample, according to a statement released by the Saudi energy ministry.
U.S. President’s Donald Trump’s decision to withdraw from the 2015 nuclear deal and re-impose sanctions on Iran, now a major exporter of crude, has roiled markets.
“We are back to the situation where we were before the 2016 agreement and in the meantime Iran has grown its exports by 1 million barrels a day,” Pouyanne said. “It’s why you see the oil price going up and up and up."
A day earlier, Total said it wouldn’t commit any more funds to Iran’s South Pars 11 natural gas project, in which it took a controlling stake last year. The French company won’t risk investing in Iran following the return of U.S. sanctions unless it can obtain a waiver.
“I’m not sure it would easy to obtain, to be honest,” Pouyanne said.
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