‘That’s going to push prices higher’: Oil expert warns of rising prices this summer

The price per barrel of Brent crude oil is currently hovering around $72.60 after it peaked at $126 in April amid escalating tensions between the U.S. and Iran.

Jay Young, an oil operator and CEO of oil investment firm King Operating Corporation, explained on “The John Curley Show” on KIRO Newsradio how the U.S. is currently in the sweet spot for oil prices, but that he expects the price to go up as supply is not meeting demand.

“You want to keep prices between $65-$85, at that level. You don’t want to overproduce, because then prices just go down, and it’s just Armageddon in the oil and gas industry,” Young said. “You’re producing so much oil, but you’re not making any money. Why do we need $78 a barrel, and why is that a good price? Because then you could drill a $10 million well, and you can make $15 to $25 million off that.

“If prices go down too far, you’re not making as much money; it’s not worth it,” he continued. “That’s what I’m surprised about right now, that rig counts stayed steady. It hasn’t gone up a lot because, you know, we saw $100 oil, a little higher than that, and it’s staying around the $70-$80, but there are so many countries that are coming back in right now that everybody feels like that oil could go down.”

Young says summer travel demand will push prices higher in the months ahead

Young emphasized how prices for consumers could jump due to an increased need for oil over the summertime for travel, but while the U.S. uses roughly 20 million barrels each day, it’s only producing 13 million.

“I agree that it could go down a little bit more at this point, but when the numbers get in during the summertime, when we need summertime oil, when people are driving for vacations, and we go into the end of the year, we’re not going to have the numbers that we had before,” Young said. “We’re not going to have 20 million barrels or 13 million barrels; we’re going to have a lot less than 13 million barrels of oil in the United States.

“That’s going to push prices higher,” he continued. “We are the biggest consumer of oil in the world, and we need oil. If we don’t have it, just like everywhere else, I mean, the price is going to go up.”

Watch the full discussion in the video above.

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