T Boone Pickens tells Cramer: $100 oil will return

With the recent collapse of oil, Jim Cramer has turned to a real expert on the subject to get a better sense on where the oil patch is headed during this crucial time.

That is why he has turned to oil tycoon T. Boone Pickens, best known as an American business magnate and financier who chairs BP Capital Management. Cramer thinks this Oklahoma native understands the oil business better than anyone else and could shed light on the importance of OPEC and impact of Russia on the energy space.

"They didn't say they wouldn't cut, but OPEC will have to cut and that is what's going to happen. The Saudis are the ones that make the cut. They can take $70 oil and take it out 10 years they have the cash reserves that allow them to do that. But they can't do that to the rest of OPEC," added Boone.

T. Boone Pickens, chief executive officer of BP Capital Management
Chris Goodney | Bloomberg via Getty Images | Getty Images
T. Boone Pickens, chief executive officer of BP Capital Management

Pickens said that the industry assumed that the demand for oil would increase in 2014, and the actual demand was half. He noted that he expects that oil will be back at $100 a barrel in 12 to 18 months.

"Are they trying to teach the shale oil producers in the United States a lesson? No, they're not trying to do that. OPEC likes to be liked, just like we like to be liked and they will make the cut," he said.

Boone does expect that there will be a decline in permits, given the turmoil overseas, and that the development will prevent the U.S. from increasing production next year with the 1,900 rigs that are running currently.

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As for the threat of Russia to the energy space, Boone commented on the country's sensitivity to oil-related GDP when he said, "To me, Russia is a poor country. They have a couple of assets, and that is it. I put oil and gas as one asset; the other asset is vodka. They don't export that, they drink it. They have one asset that provides for their GDP, and that's oil and gas. They can feel a 10 cent drop."

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