Brent Crude Oil Price Forecast 2016
Present events in oil market are shocking to many investors. The oil prices fell to a new 12-year minimum and are continuing its downward trend. The world’s officials are concerned of this situation, as the price below $25 a barrel is not sustainable for the majority of producers.
For example, the boss of the British Petroleum Bob Dudley made a prediction that the oil price will rise in the second half of the year. It is connected with the increased demand from the USA and China. Despite the year with lots of volatility, he assured that the price will not fall as low as $10 as some analysts are predicting. But he has a positive prediction that by the middle of the year the brent crude oil price would rise to $30 - $40 and even $50. But his opinion contradicts the assessment of the International Energy Agency. The demand of North America, China and India is increasing. And this will get back into balance supply and demand, but the oil prices are not to rise sharply.
Brent Crude Oil Price Forecast 2016: Middle East factors that affect oil prices
Talking about Iran Mr. Dudley said that BP will be careful in the interactions with the country, due to the unstable situation in the Middle East. This means that one of the major players in the oil business is still not participating. And when Iran does reenter the scene, the prices may move even lower because of oversupply.
Saudi Arabia announced that a major crash in brent crude oil price will not happen, but if you take into account the yearly fall of over 70% that already did happen. Nevertheless, the Saudi foreign minister was asked about allegations that the kingdom is trying to hurt Iran with cheap oil prices.
According to insider information Iran has a ambitious plan in ramping up oil production of around 500,000 barrels per day as it aims to boost output by as much 1 million barrels within a year.
But Saudi Arabia, which is struggling with its own financial problems (due to cheap oil, the price of which reached has fallen below $ 28), is not going to do any favors to Iran.
It is also said that in the Middle East, the conspiracy theories are about what the great powers are doing. In the West, the conspiracy theories are about what the middle eastern oil powers are doing. And this not helping to raise the prices in any way.
Brent Crude Oil Price Forecast 2016: OPEC producers
The oil question is so important that the world's business leaders will gather at the World Economic Forum with mixed messages from the OPEC oil producers. This is due to the group of 13 producers facing the worst internal crisis in its 55-year history.
Nigeria's top oil official wanted to have an emergency meeting with United Arab Emirates officials to discuss a possible reduction of oil production. But the United Arab Emirates oil minister rejected that suggestion. As it was said recently the United Arab Emirates will produce as much as brent crude oil as it sees fit.
The emergency meeting proposed by Nigeria and others could not come at a more challenging time. Today OPEC appears to be divided into two main camps. From the one hand - nine members who want to scrap the Saudi-led price war with non-OPEC producers. From the other hand Saudi Arabia, Kuwait, Qatar and the United Arab Emirates who hold nearly all of OPEC's spare capacity, want to continue the fight. “Non-OPEC producers should not attempt to prop up prices for Russia, and other non-OPEC countries”, said the United Arab Emirates minister.
Despite all the difficulties that occur in the oil market, there is still hope that the oil producers are able to reach a mutually beneficial agreement.