Middle East: Oil unlikely to recover to US$100+/barrel till 2020 - OAPEC
Source: Middle East Insurance Review | Mar 2016
Oil prices are unlikely to exceed US$100 per barrel until 2020, according to a study conducted by the Organization of Arab Petroleum Exporting Countries (OAPEC).
Oil producers have seen prices fall from $114 a barrel in June 2014 to below $30 a barrel. Factors affecting the demand and supply, such as the expected return of Iranian and Libyan oil to the market, and the level of cooperation between non-OPEC members of top oil producers and OPEC member states, will still play a role in international markets, reported the Kuwait News Agency citing the OAPEC report.
The increase in US shale oil production and recent developments in China’s economy and the European sovereign debt crisis are other factors affecting prices, it added.
One consequence is that economic growth in the GCC region is expected to have slowed to 3.25% in 2015 and to decline to 2.75% this year, compared with 3.5% in 2014, according to the International Monetary Fund.
Gulf Arab states face fiscal pressures and are expected to require more than $250 billion over the next two years to meet budget deficits, said Moody’s. They are likely to tap bond markets to raise the money and could also sell some state assets.
Several Gulf states are undertaking fiscal reforms to curb spending and diversify sources of revenue, including taxation and subsidy reforms. They are also preparing draft laws on value-added taxes that could be imposed from 2018. In addition, several countries have removed long-standing fuel subsidies.