Why predicting oil prices is a mug’s game

A few days ago Shaikh Yamani gave a rare interview to the BBC. In it the former Saudi oil minister predicted that oil prices might peak at more than $100 a barrel, but in the long term they could just as easily drop back to the sort of low levels seen in the 1990s.

This is about as far from received opinion as you can get.
Most economists have been talking for a while of “a new paradigm” – a world in which oil prices settle into a stable price band of $50-60 a barrel.

But then again, these same economists were confidently predicting a $20-25 price bracket back in 2003, before oil prices started to climb. And climb. And continue to climb.

From the Gulf to the East Coast of the US, senior bank economists and oil market wonks scrambled to revise their forecasts.

Gulf Daily News