Oil at $100 May Look `Cheap' Within Five Years, Alfa Bank Says

Crude oil prices of $100 may look ``cheap'' within five years if OPEC production fails to keep pace with global demand growth, according to Alfa Bank.

``We may hit peak oil in the course of the next three, four or five years, in which case $100 oil will look somewhat quaint,'' Alfa Bank's Moscow-based Head of Research Ronald Smith said in an interview with Bloomberg television.

Peak oil is the theory that global crude production is set to decline as new discoveries fail to make up for falling output from older oilfields.

Some forecasts indicate Saudi Arabia, the largest producer in the Organization of Petroleum Exporting Countries, may be unable to reach sustainable output of 15 million barrels a day and fail to meet an annual demand increase of 1.5 million barrels a day, Smith said.

Global oil demand will ``hold up'' in the event of a U.S. slowdown as consumption growth is led by Asian and Middle East importers, while usage within the U.S. itself ``has not shown much sensitivity'' in the past to weaker economic activity.