The price of Brent crude will revert to $80 per barrel, when both OPEC and non-OPEC producers cut production late in the third quarter of 2015, analysts from the Economic Impact & Energy Advisory (EIEA) said.
Saudi Arabia is putting its long-term strategic objectives before short- term treasury funding concerns, as it continues to produce and export crude at elevated levels, according to EIEA’s advisor Jean Francois Seznec.
One of the Kingdom’s immediate concerns is to agree on a deal with other large producers outside of OPEC to simultaneously reduce oil production, the forecast said.
Saudi is also waiting for the P5+1 talks between Iran and the West to formally conclude so that it may reach a long?term natural gas supply deal with Tehran.
Once these objectives are met, global oil supply should experience a significant reduction and prices should increase in response, the forecast added.
However, prices are not expected to reach the highs witnessed in June 2014, given weak global economic conditions and the desire to maintain medium?term market stability.
Before it climbs back up to $80 a barrel, Brent will remain around the $50 mark in Q1 of 2015 and increase slightly to $54 in Q2, according to the EIEA.
Brent will average $62.25 per barrel this year and rise further in 2016 with global demand recovering and production levels remaining low, the EIEA said.
Saudi Aramco CEO Khalid Al-Falih said last week that the burden of low oil prices and oversupply on the market would need to be evenly distributed between both OPEC and non-OPEC producers.
The Kingdom’s petroleum minister said Saudi Arabia will not curb its current production even if prices drop to $20 a barrel, while the UAE reiterated it will also keep its output levels unchanged despite lower oil prices.
