“We have not seen the floor”, predicted Fereidun Fesharaki, Chairman of FGE – FACTS Global Energy at the AIC 2016. Yet the global energy market guru said that recent unexpected supply outages will be rectified in short order and the crude per barrel price could inch up through the summer – to $45 by end of July and $50 by October. “Lower for longer is the common theme that people talk about today,” Osmar Abib, Global Head of Oil & Gas, Investment Banking and Capital Markets, at Credit Suisse, agreed. Added Peter Botten, Managing Director of Oil Search Ltd: “I see the pricing structure staying reasonably volatile.”

For oil and gas companies, these are challenging times. “It is necessary to run your business as best as you can based on the oil-price reality,” Botten advised. “We run our business at the lowest possible cost and still see opportunities for growth in this market.” The downward cycle is good for the industry and will make energy enterprises more efficient.

High oil prices had made producers act stupidly, Fesharaki argued. “This is when you need to get thin. Today’s environment is not sustainable and $100-a-barrel oil was a fake market.”

What are some of the risks on the horizon for industry players? There are questions surrounding Iran’s return to the market with the lifting of sanctions, political instability in Venezuela, and Saudi Arabia’s move to privatize part of the state oil company, Aramco. The impact of fracking is also an issue.

Iran is having difficulties getting back into the supply chain, in part because funds that are supposed to be unfrozen have yet to be transferred. Venezuela’s output has diminished and will take time to rebound. “Iran and Venezuela are two big areas that can make a global difference but neither of them tomorrow,” Fesharaki ventured. If political rivals in Libya form a unity government and get back into the market, that could pose significant downward pressure on prices, he added.

Regime change in some oil-producing countries is a risk. Instability in Saudi Arabia could be a game changer, Botten suggested. “There really is quite a challenging environment with the royal family.” The US election in November could also have a destabilizing effect. As for fracking, while the shale revolution has slowed, said Abib, “the idea that fracking will go away is pretty hard to believe.”