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Estimates on Crude Oil Prices 2015 and Beyond

Jana  24462-20-001 Messi  Jana 81 (Black) 81 B073W57QK1 Parent 9ade030 - dianaspetsalon.com

Posted on March 2, 2015 No Comments ↓

In less than six months the price of a single barrel of Brent crude oil was slashed in half. In fact, a publication from the Organization of the Petroleum Exporting Countries (OPEC), a collection of oil-dominant economies in the Middle East, South America, and Africa, listed the price of Brent crude as just over $109 in May 2014; as of this writing the same amount fetched approximately $52.

Of course, this rapid decline in oil prices has brought both joy and sorrow to nations worldwide; many end consumers rejoice over low prices at the pump, while Russian government heads fear a looming recession as their oil-export economy suffers from diminished profits. Amidst all of the effects, however, many across the world have one question in mind: will prices stay at current levels, or is a rise predicted again in the future?

What Caused Prices to Fall?

The past year’s drop in oil prices is the result of a variety of factors. For one, the United States is drilling extremely thoroughly and efficiently, largely due to the widespread use of hydraulic fracturing. In fact, such a surplus has stirred a debate in Washington, D.C. over whether or not the U.S. should begin exporting oil, ending a decades-long export ban that began in the 1970s.

Furthermore, a host of geopolitical elements have contributed to the fall. Saudi Arabia, a leading member of OPEC and one of the largest oil producers in the world, has declined to reduce production at all, causing the price to plunge. Additionally, Libya, a country whose oil industry was crippled due to the civil war, has seen some recovery in that sector, further flooding the market with oil.

Looking Ahead to 2015 and Beyond

As analysts look to the future, some have a more bearish outlook, while others believe that prices may surge well above previous levels. Specifically, Abdulla al-Badri, Secretary-General of OPEC, has stated he believes that the cost of oil has currently bottomed out, and that it is now on the rise to over $200 barrel. He cites deep spending cuts among oil companies across the world and decreasing rig count in the United States, which have led to underinvestment in the oil industry; this, in turn, will lead to a decrease in oil supplies down the road. Any subsequent demand increase in the future will cause prices to sharply rise.

Michael Lynch, a petroleum economics and energy policy analyst, and regular contributor for Forbes, has a different outlook; he believes that even a price of $80 may be difficult to sustain with the rising global oil supply. Why does he believe this? Rising oil production in Iraq and Kurdistan, as well as the loosening of oil export sanctions with Iran, will again push prices downward. Even decreased oil production and a strong global economy in the coming year won’t be enough for prices to return to previous levels, he believes.

For now, speculations abound as to where the cost of oil will settle in the future. But with some experts foreseeing a near spike, with others holding a more cautious view, ultimately the future has never been more uncertain.

Source: phillipsenergy.com

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Jana  24462-20-001 Messi  Jana 81 (Black) 81 B073W57QK1 Parent 9ade030
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