Energy

Saudi Arabia Sees $75 Oil, Which Would Kill An Economic Recovery

Saudi Arabia’s oil minister expects oil to move back to $75, about 22% higher than it is now. He also believes that OPEC will not have to cut production for crude prices to rise. Demand is already strong in Asia, Saudi…

By Douglas A. McIntyre
Published May 24, 2009, 6:04am ET · 1 min read

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Saudi Arabia’s oil minister expects oil to move back to $75, about 22% higher than it is now. He also believes that OPEC will not have to cut production for crude prices to rise. Demand is already strong in Asia, Saudi Arabian oil minister Ali al- Naimi is quoted by Reuters as saying. He believes that the increasing need for oil in other large industrial nations will rise as the global economy recovers.

The Saudi formula may work, but only if the move up in crude prices trails GDP improvements.

If crude moves to $75 due to speculation or an increasing need for oil in China and India, it could ruin a recovery in the US, EU, UK, and Japan. Consumer and business demand would be severely undermined if a greater percentage of every dollar of income has to go to oil and gas. The recovery of industries like automotive and airlines could be pushed back several quarters or, possibly, several years.

Low oil prices have played a part in keeping the recession from getting worse. It appears that is about to change.

Douglas A. McIntyre

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Douglas A. McIntyre

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.

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