Saudi prince Alwaleed said recently that he believes global oil prices will never reach the $100 level again. Considering Alwaleed’s investment track record plus his inside track knowledge of petroleum policies, it would be foolish to ignore this man’s prognostications. After all, it was Mr. Alwaleed who rushed in to snap up tons of Apple stock when Apple was all but flat on its back looking for direction after it booted its CEO Gil Amelio. Alwaleed made a killing off that deal and still owns a nice chunk of Apple. That’s just one of the deals that highlight why Alwaleed’s finance company is one of the most successful investment firms in the world. He also publicly warned the Saudi Arabian government about the pricing threats posed by the North American shale oil industry. The Saudis originally ignored him until they realized their market share was eroding thanks to American drillers. Maybe if they listened to Alwaleed sooner, global oil didn’t have to face an almost overnight price crash. Regardless of how you cut it, this man is definitely worth listening to.
What Alwaleed did not say
Considering how credible Alwaleed is, it is to easy to get excited about his pronouncement about that the days of $100 a barrel oil are over. In fact, it is very easy to confuse his statement with thinking that the current pricing of oil is where oil prices should be. He didn’t say this. In fact, in his interview with Maria Bartiromo, Alwaleed outlined the reasons for oil’s current pricing: overproduction by oil producers and weak demand. If Saudi Arabia changes its tune in the future and starts looking to protect its revenue instead of its market share, prices will spike up. If the global economy improves and demand picks up, prices will spike up. While the end of $100 a barrel oil is definitely a good thing, I am not sure $90 to $99 a barrel oil is all that great.