By Leman Zeynalova
Oil prices can drop from the current level, if OPEC fails to reach an agreement, director of Downstream Consulting at IHS Markit, Spencer Welch told Trend Nov.3.
“We think the bottom of the market was in January 2016 when oil was below $30 per barrel,” he said. “Current prices are nearer $50 per barrel, and they could drop from this point, particularly if the OPEC meeting on Nov.30 fails to deliver it’s promised production cap of 32.5-33.0 million bbl/day of production (from OPEC).”
However, the expert said the IHS Markit does not think prices will go below $30 per barrel.
“Fundamentally, prices need to slowly rise to meet the cost of supply,” added Welch.
Touching upon the possibility of price peak, he pointed out that prices could go above $100 per barrel again, but IHS Markit does not expect this to happen before 2020.
IHS Markit believes that prices need to rise to cover the cost of finding and developing sufficient oil to meet global demand, added Welch.
“Short term, pre-2020, $100/bbl is possible, but it would need a significant unexpected loss of supply onto the market,” he said.
In September, OPEC producers agreed during the informal meeting to cut down the oil output to 32.5 million barrels per day (bpd) from current production of 33.24 million bpd.
How much each country will produce is to be decided at the next formal meeting of OPEC in November.