The Case For $80 A Barrel Oil

Oil prices may hang above $100 a barrel for the rest of this year but will fall as low as $80 next year as world demand slackens and Saudi Arabia tries to buy influence with the incoming president by pumping more crude oil, an influential Lehman Brothers analyst said in a report issued today.

Saudi engineers have been working on several big projects that could boost the nation’s output by 1.3 million barrels a day–more than the expected increase in global demand next year–but the secretive nation is “likely to keep its political tool, excess production capacity, close to its chest until it has a new U.S. president to win over,” Morse writes.


Saudi production is currently a little less than 10 million barrels a day.

The Lehman report contrasts sharply with a Goldman Sachs (nyse: GS – news – people ) prediction earlier this week that crude prices could soar as high as $200 a barrel as non-OPEC producers struggle to maintain output, let alone increase it.

Forbes