Gazprom boss moves the goalposts in oil match

Maybe he had a premonition of his country's humiliating defeat at the hands of the Spanish in Euro2008, maybe he was inspired by the TV pictures of striking Spanish truck drivers. Whatever, Alexei Miller, Chief Executive of the Russian energy giant Gazprom, certainly knows how to get revenge on Spain, and the rest of the non-oil producing world.

Miller yesterday moved the goal posts in the international energy competiton, in which a team largely consisting of Opec countries and Russia is taking on the Rest of the World (mainly America and Europe). He believes that the price of oil will hit $250 sometime next year, way beyond the level predicted by even the most bullish of forecasters, the US investment bank Goldman Sachs, which kicked off this match with its $200 a barrel shot earlier this year.

As the head of Russia's leading energy company (and therefore in charge of the second biggest oil reserves in the world, according to some experts), Miller is well placed as an expert in this area. Of course, it is also in his and his company's interests to raise the stakes on oil – each dollar rise translates directly into revenue for Gazprom.

But support for Miller's stance came from an unexpected source. The International Energy Agency – normally the most level-headed of organisations – said that oil prices would have to rise because non-Opec producers (of which Russia is the biggest) were not increasing supply fast enough to match demand.

Only higher price levels could choke off that demand, the IEA said, and bring some equilibrium back to the crucial oil market. That is rather like saying food price crisis will continue to get worse until the world's poor get used to going hungry.

On the world markets, the oil price was jittery yesterday. Since its great leap forward last week, it has not fallen below the $130 mark, and some experts believe a new floor has been set at this figure.

You certainly get the impression that all the pressure is upwards.

Perhaps we should look to the performance of the Russian football team as the next forward indicator of energy prices.

 

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