The Last Word: Jeroen van der Veer; Why Oil Will Get Cheaper.(Interview)

Byline: Rana Foroohar

With oil reaching another record high last week, it may seem odd that Jeroen van der Veer is expecting the price of crude to drop significantly. But the CEO of Shell and oil-industry veteran isn't given to rash predictions. Taking the helm of the troubled company in 2004, he helped Shell rebound from an accounting scandal.

He's since streamlined a convoluted corporate structure and taken advantage of the record oil prices to ramp up investment in exploration and new technologies. He spoke with NEWSWEEK's Rana Foroohar last week about the industry's most pressing questions, including oil nationalism, security and those record-high prices. Excerpts:

Foroohar: Oil hit $75 a barrel this week. How sustainable are the current prices?

Van der Veer:

There's no point in predicting the oil prices, because it tends to be a pretty bad prediction. Why is that? Because there are so many factors at play. What I will say is that as recently as this weekend, I looked at data showing that crude-oil stocks in factories around the world are very normal or even better than normal. It's a bit of a mixed picture, but by and large, there is no physical shortage in the world. So there must be two reasons [for the current prices]--geopolitical tensions in the world, and the amount of nontraditional money like hedge funds moving into the oil market.

Are traders distorting the prices?