‘Electricity is the new oil': Expert anticipates oil prices to stay below US$70

CTV News

03-07-2025

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Amid ongoing tensions in the Middle East between Israel and Iran, a commodities expert says he expects oil prices to remain relatively steady, as the conflict isn't likely to cause any major supply disruptions even if the current ceasefire is broken.
Rob Thummel, senior portfolio manager of Tortoise Capital, said prices should be in the US$70 range but are down a little bit due to an oversupply of oil in the global market.
'In order for oil prices to return to what we think is the $70s, kind of normal price, you need the market to really rebalance,' Thummel told BNN Bloomberg Wednesday. 'What that means is either oil production in other locations is going to fall, and, or effectively, demand for oil is probably going to rise more than what people expect in the second half of the year.'
Brent crude hovered around $68 per barrel on Thursday morning while West Texas Intermediate was changing hands at $67.
Members of the Organization of the Petroleum Exporting Countries (OPEC+) are expected to meet this week to determine output levels for August. Member countries produced an estimated 28.7 million barrels per day of crude oil in 2022, which was 38 per cent of total world oil production that year, according to the U.S. Energy Information Administration. The largest producer and most influential member of OPEC is Saudi Arabia, which was the world's second-largest oil producer in 2022, after the United States.
'OPEC+ has added back oil production throughout the year, and the anticipation is that OPEC+ will add back additional oil supply over the next several months,' said Thummel. 'The oil market is currently oversupplied, and that ultimately means oil prices have come down and have been pushed down.'
OPEC+ remains ready and able to increase oil production if the conflict between Israel and Iran escalates, he noted.
'Iran exports one and a half million barrels a day of oil by one and a half per cent of global oil consumption. If there would have been disruptions in Iran's exports, then Saudi Arabia and other OPEC countries were prepared to step in and fill that supply gap that would potentially have materialized should Iran exports be less and Saudi Arabia is still ready and willing to be able to do that,' said Thummel. 'We'll see how the second half unfolds. We don't expect any disruptions in the Middle East because of the conflict, and so as a result of that, we continue to expect the oil market to be oversupplied in 2025 and we will then expect to see oil prices right around the $65 range where they are currently, for the rest of the year.'
Oil market watchers have been fixated on Iran after it suspended cooperation with the International Atomic Energy Agency, the United Nations' nuclear watchdog, following U.S. airstrikes to dismantle nuclear facilities in the country.
According to the Associated Press, the suspension will likely limit the ability of inspectors to track the nuclear program that had been enriching uranium to near weapons-grade levels
'Electricity is the new oil'
Recent oil market volatility comes as the demand backdrop for crude is undergoing major changes, Thummel said.
'Electricity is the new oil, and so from our perspective, natural gas and nuclear are the future for the energy supply. Oil still plays a role, but it plays a lesser role. So natural gas and nuclear are ways to play it,' he said.
'There's plenty of really quite high-quality natural gas stocks in the U.S. and Canada as well and then natural gas will really be the big supply source, energy supply source in the near term. In the medium term, nuclear will start picking up in terms of its market share, probably in 2030 and beyond. So that's the way we look at it.'
With files from Reuters