Maugeri: A New Prediction on Global Oil Prices

In June 2012, when pundits were talking about “peak oil” and oil prices were hovering around $90 a barrel, energy analyst and Belfer Center Senior Fellow Leonardo Maugeri made a bold prediction that defied conventional wisdom. “Oil supply capacity,” he wrote, “is growing worldwide at such an unprecedented level that it might outpace consumption. This could lead to a glut of overproduction and a steep dip in oil prices.” Those who heeded his forecast made stunning profits, as oil prices began plummeting in 2014.

The secret to Maugeri’s analysis? An original, bottom-up, field-by-field analysis of most of the world’s oil exploration and development projects.

Today, a similarly rigorous analysis of supply and demand leads Maugeri to another contrarian conclusion. In his latest policy brief, Maugeri argues that in spite of recent OPEC cuts, oil production remains well ahead of global demand. “OPEC production cuts (which notably fall short of the original target envisaged by the organization),” he writes, “appear to serve mainly as a psychological support to oil prices.” Barring record oil demand growth, he expects that prices could be headed for another substantial fall in 2017.