CIBC World Markets chief economist Jeff Rubin said that oil prices will increase sharply next year. Oil prices are already at a record level of around $80 per barrel, but Rubin believe sthat increasing demand, as well as falling export capacity provided by OPEC, Russia and Mexico will drive the barrel price into the region of $100 by the end of next year.
Rubin said that the export capacity of OPEC, Russia and Mexico will drop by 2.5 million barrels per day as oil producing countries are “cannibalizing” their export capability with domestic demand that is growing at a rate of about 5% per year. “OPEC members together with independent producers Russia and Mexico consume over 12 million barrels per day, surpassing Western Europe to become the second largest oil market in
the world,” Rubin said.
The economist mentioned that this environment will drive greater reliance “on higher cost unconventional deposits”, such as Canada’s oil sands, which he expects to become the “single largest source of new oil exports by decade end.”