'Oil prices at US$100/barrel not sustainable'

Petroliam Nasional Bhd, Malaysia's state oil company, expects oil prices to decline as crude above US$100 a barrel restrains demand, according to Chief Executive Officer Shamsul Azhar Abbas.

The company estimates a fair price of oil between US$85 and US$90 a barrel for benchmark Brent crude, compared with current futures markets at about US$123 a barrel.

"I don't think the current high oil price is sustainable for the world economy," he said in an interview in Kuala Lumpur today. "It has all been hiked by the security instabilities in Iran and so forth. It's amazing. I don't think it can last long."

Oil consumption is already suffering from elevated prices, Shamsul said. Malaysia's Tapis grade of crude oil sells for about US$133 a barrel, according to data compiled by Bloomberg.

"A lot of them are complaining," the CEO said, referring to his customers. "China is almost cracking up already in terms of its economic growth. We are beginning to see some amount of demand destruction."

Shamsul said the U.S. and its allies shouldn't tap strategic oil stockpiles in a bid to bring down prices. -- Bloomberg