OPEC makes gloomy assessment on oil prices

OPEC anticipates oil prices remaining below $100 a barrel for the next 10 years, which may lead to production limits being recalled

Photo by: Reuters
Photo by: Reuters

Updated Jul 28, 2015

The Organization of the Petroleum Exporting Countries (OPEC) forecasts that oil prices may remain below a $100 a barrel benchmark for the next decade in a report cited by the Wall Street Journal.

However, the discouraging outlook on price consistency may impact markets if production limits are restored. 

According to the report, oil prices will reach $76  barrel at the most by 2025, while crude oil is expected to fall below $40 a barrel. 

A price of “$100 is not in any of the scenarios,” said OPEC official. This is interpreted as a bad sign for the 12 member oil cartel. 

According to data received from the International Monetary Fund, Qatar and Kuwait can cover their planned government expenditures at $76 a barrel. Besides these two, other countries will struggle as they rely on oil to set financial plans and trade.

Volatility in oil prices - partially caused from a surge in US supplies due to shale oil production,  has became a great hurdle for OPEC. Thus, upon an agreement, OPEC has agreed to keep production at 30 million barrels per day in November, keeping oil prices lower than many oil-exporting countries would like.

According to OPEC’s draft, they are advised to return to the production-quota system which they abolished in 2011 due to disputes between countries over production levels, reports the Wall Street Journal. 

The markets expect either the current price forecast to change on June 5, during the OPEC ministers’ ordinary meeting, or that a strategy report might be agreed upon. 

TRTWorld and agencies