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Oil prices should recover next year: Hess CEO

Continued demand growth and falling production should help to end a protracted slump in energy prices in 2016, Hess CEO John Hess said Thursday.

"Nothing cures a low price like a low price. The seeds have been planted for a slow recovery in oil prices," he told CNBC's "Squawk Box." "It takes about two years for the market to rebalance, and we're in the first year of that two-year period."

Hess noted that global investment in exploration and production has fallen from $700 billion last year to $550 billion this year. With U.S. crude prices having slid to about $45 per barrel again, he said investment will sink even further in 2016.

Read More 5 reasons oil could be nearing a new tipping point

He also sees deficits after capital expenditures and dividend payments for majors like Exxon Mobil and ConocoPhillips, as well as independent U.S. producers, growing to a combined $100 billion. That leaves producers with little money to spend on reinvestment, which will ultimately drag down production.

U.S. shale output declines are projected to account for 400,000 barrels per day of an anticipated 500,000 bpd drop in non-OPEC production, Hess said, citing the International Energy Agency.

Still, demand remains "fairly robust," Hess added, noting it is up about 1.8 million bpd this year and should be up 1.2 million bpd in 2016, even accounting for slowdown in some countries and the return of Iranian oil to the international market following the anticipated unwinding of sanctions.

"When you add demand going up next year for a 1,200,000 barrels a day, and non-OPEC going down 500,000 barrels a day, there will be room for Iran, and the markets should recover," he said.

Read More 'Urgency' for oil exporters to adjust spending: IMF

Hess oversaw the $2.8 billion sale of Hess's downstream retail fuel business to a Marathon Petroleum subsidiary in 2014, as well as a $2.7 billion deal earlier this year that offloaded a portion of its midstream processing and transportation units.

The company is now strategically focused on upstream exploration and production in North Dakota's Bakken and Ohio's Utica shale, the Gulf of Mexico, the North Sea, the Gulf of Thailand and offshore West Africa.

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