What will happen to oil next: forecasts

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:43

The question of what will happen to oil is of interest to a fairly large percentage of the world's population. The increased interest in the formation of prices for "black gold" can be explained by their influence not only on the economies of many countries, but also on the world economy as a whole.

2014 prices

In the second half of 2014, the cost of raw materials was at the level of $110, which was great not only for Russia, but also for other fuel exporting countries. The budget of Russia was replenished due to the vigorous activity of the largest oil-producing enterprises, in particular, such as Gazprom. Oil rose in price until mid-summer 2014 and reached its climax at $115. A similar situation developed in the United States, in the OPEC countries and in some European countries. From the end of the summer of 2014 until the end of December, the whole world saw a rapid fall in oil prices, which reached the level of $60. By the end of winter, a multi-year low was recorded at around $48. At that time, even world experts could not say with partial certainty what would happen to oil in the near future, since all the forecasts made the day before turned out to be almost completelywrong.

Factors that stimulated the fall of oil, and their impact now

Trying to make a forecast for the future, many experts start from the factors that, in their opinion, led to the fall in prices. You can talk about the following points:

• Reducing the pace of global economic growth. The EU countries and China have stopped in development, Japan is in recession. The industry of the states requires less fuel, which leads to a sharp reduction in demand. A large amount of fuel and little interest in it stimulate a fall in prices. Experts predict a slight improvement in the situation by the end of 2015.
• OPEC countries, starting from September 2014, have significantly increased the volume of produced fuel to the level of 30.5 million barrels. Saudi Arabia has officially announced that it does not intend to reduce quotas for the production of "black gold" even if its value on the world market is only $20.
• Growth in US oil production to 8.9 million barrels.
• Great competition has become the basis for discounts on fuel purchases. In a tough struggle for the consumer in 2015, such countries as Qatar and Iran, Saudi Arabia agreed to give way in price.
• Total demand for carbon is declining due to the development of energy-saving technologies in Europe. The trend will not change in the coming decades.

If we consider all the factors together, they say that by the end of 2015 the situation on the world oil market will not return to its previous course. Most experts point to an increase in the cost of fuel to the level of $75. In the market on May 5, 2015, the price was fixed at $70.

The cost of oil in 2015, taking into account the decisions of governments of countries

Many experts, trying to make a forecast about what will happen to oil this year, start solely from the decisions of the governments of the countries participating in the world oil market. Saudi Arabia's budget was drawn up taking into account the fact that the cost of a barrel of oil will not fall below 2014 levels. Based on this, many experts bet that fuel will be traded at $99 throughout 2015. After the collapse of the market, the country's budget was completely revised. The bet was made on 60 dollars per barrel of oil. In the field of the official publication of budgets, forecasts began to appear that in 2015 the price of fuel would not exceed the price mark of $65. This link to Saudi Arabia is due to the fact that the state is the leader of a cartel called OPEC.

What was discussed at the international conference in April 2015?

In April 2015, an international conference was held in Texas, during which issues related to oil were actively discussed. In the speech of the head of the Lukoil company, there were words that fuel prices would no longer creep down. Businessman Vagit Alekperov noted the fact that prices had reached and broken through their historical minimum, which directly testified to the unlikely continuation oftrends. According to Goldman Sachs analyst Jeff Kerry, prices went down in the first half of 2015 due to the publication of poor forecasts for the third quarter of 2015. He attributes the extremely sharp growth of the US dollar to the prerequisites for the phenomenon. Jeff focuses on the fact that the situation has stabilized a bit. Yukha Kahenyan, who holds the post of Deputy Director of the IMF's Asia and the Middle East, fully agreed with his opinion. Both experts are inclined to further price growth, which was also predicted by the IMF. Recall that at the end of August 2014, experts were guided by the cost of oil by the end of 2015 within $99.

The other side of the coin

Considering the question of what will happen to oil in the future, he does not agree with the opinion of Kahenyan and Kerry, and also refutes the IMF forecast Aidar Kozybaev, a representative of the National Bank of Kazakhstan. He says that global oil will not be able to stay at $99 any time soon, in fact, it will not even reach this level. The economist is betting $85 a barrel on Brent crude and $75 a barrel on WITI crude. The specialist bases his assumptions on the strong influence of the situation in Russia on such countries as Azerbaijan and Uzbekistan, Kazakhstan and Turkmenistan, which are importing states. An excess of oil caused prices to fall, and the spring stabilization of the situation in a number of states had a noticeable effect on the restoration of the price level. In the future, the trend will continuedespite the fact that the maximum of 2014 (105 - 110 dollars per barrel) will not be reached.

The most shocking forecasts of 2014: the market against the state budget

Back in 2014, the most frightening forecast, which was considered only by some world analysts, including Russian ones, was the one according to which oil quotes would drop to the level of $60. For the most part, experts agreed with the price of "black gold" in 2015 at $90. A less stressful scenario assumed a decline in Urals oil to $91 in 2015 and to $90 during 2016-2017. Presumably, this should have led to a decrease in GDP in 2015 to 0.6% with a recovery to the level of 1.7-2.8% already in 2016-2017. The whole world watched how the situation unfolded in fact (falling below $49 per barrel in January). The oil market behaved in an unpredictable way.

Where to look for the truth?

All the forecasts that analysts are able to give today vary widely: from incredibly optimistic to stressful. OPEC countries, which do not intend to reduce fuel production quotas, are considering a scenario with prices falling to $20, as they say they will not change their tactics in this situation either. The IMF looks to the future with confidence and believes that by the end of 2015 oil quotes will please with values in the range of 90-99 dollars. Most market participants simply monitor the situation and avoid important decisions. It can be said thatthe truth lies somewhere in the middle, as evidenced by the situation on the market today. Despite the fact that oil production by countries has not changed over the past 3-4 months, the cost of fuel has leveled off a bit. Thus, as of mid-June 2015, Brent is at a level close to $65 per barrel, despite the fact that the level of $70 per barrel was tested.

Statistics by month of 2015

So, where will the oil market go next? Studying the fundamental factors, many experts say about the same thing. Oil exports in many countries will remain at the same level until the end of 2015, which gives good reason to talk about the following values:

• In early June, the price of oil averaged $66, at the end of the month it will stop at $69. A maximum of $76 and a minimum of $60 are predicted. For the first two weeks of June, mirror peaks have not yet been reached.
• July is predicted to be more promising. It will start at $69 and end at $72. The high and low will be at $77 and $61. The average price is $71.
• From September to December, the price range, despite the fact that oil production by countries may be redistributed due to the development of resource deposits in Russia in the Arctic and the activation of projects in the United States, will vary from $55 to $77.

What awaits the global market in 2016-2017?

Far from stableThe situation in the world does not prevent major world analysts, including representatives of the Gazprom company, from considering oil and its movement not only in the near future, but also in the long term. Comparing numerous forecasts, we can say that during 2016 there will be no catastrophic market drops. On the contrary, the situation will continue to improve. The specialists recommend starting from a low of $68 in January and counting on a high of $105 in December. In 2017, the situation will not change. In March, April and May, a decline to $63 per barrel is possible, with a further recovery to $102 in June.

The latest forecast from the Ministry of Economic Development of Russia

The Ministry of Economic Development of Russia is set to reduce the cost of oil in 2016 by 10%. The toughest forecast is for a price of $50 by the end of 2015. A comprehensive recovery of the end-summer 2014 price range is expected in 2018, but not earlier. The information document was presented to the public on April 10, 2015, while it is planned to change and modernize it, adapt it to the situation in the near future. The direction in which the price of oil is heading can be affected by a world-class economy at any time, especially if one takes into account the redistribution of shares of the international oil market. It is not worth sticking to one of the officially published opinions, since the events that may occur in the world will more than correct the situation. Major worldoil companies such as Gazprom, the oil is not able to send in the right direction. It remains only to follow the events in the world. Taking them into account, it is possible to some extent to explain how oil quotes will be formed.