The price of oil is likely to fall “much lower from here,” according to Bob McNally, who was energy advisor to former U.S. president George W. Bush.
The oil rout started on Monday, plunging over 20% following a disagreement on production cuts between OPEC and its allies. Russia declined to lower output last week, and Saudi Arabia announced Saturday that it will offer discounts to its official selling prices next month. The kingdom, the de facto leader of OPEC, is also planning to raise production, together with the United Arab Emirates.
Despite the market turmoil and resultant losses, Saudi Arabia will not cut production unilaterally, said McNally, founder of oil consultancy Rapidan Energy Group.
“Prices of oil are going much lower from here,” said McNally told CNBC on Thursday. “Everybody’s got a pain point and we’re going to go down and test it.”