The oil market is likely to continue to see oversupply in the first six months of 2016, according to Wood Mackenzie.
With the year off to a tumultuous start in the Middle East and China’s equity market experiencing a sharp fall, oil prices are reacting quickly.
“Our Macro Oils team forecasts continued global oversupply in the first half of 2016, which should help quell the oil price response as tensions escalate between Saudi Arabia and Iran,” said Wood Mackenzie.
While stating that it’s unclear what geopolitical developments lay ahead, its analysts predict Saudi Arabia continuing to seek market share, along with a decline in non-OPEC supply for 2016 — a sharp contrast to forecasts just one year ago.
“With demand forecasted to grow, Wood Mackenzie sees the supply-demand balance tighten in coming months, making oil prices more susceptible to political risk,” the research note added.
