Analysts predict rise in oil prices up to US$150 a barrel in five years
Experts who analyze the situation in the oil market predicted that oil prices may raise up to US$150 a barrel by 2025 due to reduced oil production and lower investment in this area.
“That funding pressure is going to be massive. It’s going to be really difficult for some of the producers to produce,” said Trevor Woods, Chief Investment Officer of the Ohio-based hedge fund Northern Trace Capital. This was reported by The Wall Street Journal.
Analysts believe that this will have long-term consequences. Due to the reduction in capital investments, oil production may decrease by five million barrels per day, which is 5 percent less than the pre-crisis figure. Oil companies will have to invest an additional US$625 billion over ten years to meet the demand. Therefore, oil can easily exceed the mark of US$100 per barrel in two years.
Other analysts assured that oil prices would exceed US$100 per barrel in the second half of 2020.
As of July 13, according to trading data, world oil prices are showing decline. August WTI Futures reached US$40.27 a barrel. September Brent crude oil futures fell to US$42.95 a barrel.
Fluctuations in the oil market began back in early March, when members of the OPEC+ meeting could not come to a decision. After the failure of the agreement, oil prices collapsed. According to the agreement signed in May, the member countries reduce production by 9.7 million barrels per day, 7.7 million in the second half of the year and 5.8 million further until the end of April 2022.
OPEC+ member countries and its allies plan to discuss the changes of the oil agreement on July 15 in a videoconference. Many members of the organization want to gradually increase oil production in August. Countries are ready to take this step due to the gradual recovery of the market.