SAY goodbye to the cheap crude oil.

Jorge Montepeque, Platts global director for market reporting, said on Tuesday crude prices could hit between $120 and $130 a barrel this year.

Montepeque said this “conservative” projection takes into consideration slowing growth in Asian economies as well as the US and Europe.

In London on Tuesday, Brent crude was down 38 cents at $116.43 a barrel on the ICE Futures exchange.

The jump in the oil price on Monday—sparked by an agreement to raise the US debt limit and cut spending—fizzled as traders turned to disappointing industrial production data.

The Institute for Supply Management said manufacturing activity in the US barely grew in July, the lowest
reading since July 2009.

Montepeque said the likelihood of prices going back to the $70 a barrel and stabilizing around that price is very low; he also said he sees global crude price averaging around $100 a barrel.

“In the long run, perhaps world crude prices could increase further,” he said at the sidelines of the Platts Manila forum on Tuesday.

Geopolitical factors such as tensions in the Middle East, according to Montepeque, are adding pressure for oil prices to increase.

For the Philippines Montepeque urged the need to ensure that prices are reflected transparently. “Policy is not going to do much, you just have to let the market be free,” he said.

Montepeque said giving out fuel assistance in the form of subsidies is not a good policy as it affects the country’s resources.

“[Subsidies] tend to push demand to increase because it keeps prices low. You actually harm yourself more because you’re consuming more than you should,” he said.

(With AP)