Jadwa Investment report says current $70 per barrel will not last for long
Oil prices are hovering around $70 per barrel (pb) amid fears of the US government withdrawing from the 2015 Iran nuclear deal and re-imposing sanctions, according to the latest report by Jadwa Investment.
An improving global economy and tighter oil markets had seen prices rise 18 percent quarter-on-quarter in Q4 2017, to $62 pb. Prices rose further to $70 pb in January 2018, the highest level since November 2014.
Looking ahead, however, the report predicts that prices will fall in line with Jadwa’s prediction of $60 pb in 2018 and $65 pb for 2019.
Fahad Alturki, chief economist and head of research at Jadwa told Arabian Business: “The reason for this likely correction will be twofold. There will be increased supply from additional sources. And the OPEC agreement, which will be renegotiated this June, is going to be hard to maintain if oil stays at this level.”
It notes that oil markets will likely see higher levels of volatility during 2018. Recent turbulence in global equity markets is also likely to continue, especially as speculation mounts that interest rates could be raised again by the US Federal Reserve.
And finally, oil producing nations are witnessing rising political risk. The Venezuelan economy is teetering, while Nigeria and Libya face turbulent elections.