Oil could crash to $10 within eight years amid electric car push: analyst

Oil prices are poised to crash to just $10 per barrel over the next six to eight years as alternative energy fuels continue to attract more and more investors, Chris Watling, chief executive of Longview Economics, told CNBC on Friday.

Looking ahead to 2018, Watling acknowledged that a key catalyst for the oil market would most likely be Saudi Aramco's initial public offering (IPO) in the second half of next year. Asked about Saudi Arabia's state oil group being launched on the international stock market, he replied, "Well I think they need to get it away quick before oil goes to $10 (per barrel)."

While Watling explained that he did not necessarily expect such an intense decline in oil prices over the coming weeks or months, he argued that over the long term "what happens with electric vehicles is really, really important" given that around 70 per cent of oil is used for transportation.

"We forget don't we? I mean 120 years ago the world didn't live on oil. Oil hasn't always driven the global economy … the point is alternative energy in some forms is gathering speed (and) things are changing," he said.

On Thursday, the International Energy Agency (IEA) said the global outlook for oil markets in 2018 could put a dampener on hopes for higher prices. In its closely-watched report, the IEA said global stock builds, rising non-OPEC production and static oil demand could weigh on the oil price.

The IEA's latest monthly report was published amid optimistic forecasts from the Organisation of Oil Producing and Exporting Countries, with the cartel arguing there was evidence of the global oil market rebalancing following several years of low prices.

The price of oil has collapsed from almost $120 a barrel in June 2014 due to weak demand, a strong dollar and booming US shale production. OPEC's reluctance to cut output was also seen as a key reason behind the fall. But the oil cartel soon moved to curb production - along with other oil producing nations - in late 2016.

Brent crude traded at around $57.39 a barrel Friday morning, up 2 per cent, while US crude was around $51.50 a barrel, up 1.8 per cent, the CNBC report adds.