According to Garry Ross, the founder of of a consulting company named PIRA Energy Group, the existing oil prices around the globe cannot be considered as a steady trend. He says that you don’t have to be a rocket scientist to figure out that oil prices are going to recover up to $100 per barrel within he next 5 years.
When asked about his reasoning, he answers that he doesn’t see the very huge imbalance between the current global oil supply and demand that is constantly mentioned by numerous analysts and other experts. The actual excessive supply is not as huge, especially as Saudi Arabia is currently using its full oil production capacities without opening new oil fields.
He says that all those experts saying that the current downtrend in the global market of crude oil is a steady trend fail to take into consideration the fact that any price below $50/b undermines oil exporters. At the same time, there are chances that some OPEC members will see some breakdowns in oil shipment while a cheaper oil may trigger higher consumption. All of these factors are going to back the oil price recovery in the future.
It should be noted that Mr. Ross is one of them few experts in crude oil, who managed to predict last year’s oil market crash before the market actually crashed by more than 50%.
At the same time, most experts are convinced that oil prices are going to stay low over a pretty long period of time.
In early July, the IEA published another oil report including predictions. In particular, the global oil demand is expected to shrink from 1,4 down to 1,2 million barrels a day. The experts assume that the market is still subject to excessive supply.
At the same time, almost all of them say that there is another major reason to expect a further price drop due to higher supply. The thing is that not so long ago, the West canceled the sanctions imposed on Iran over its nuclear program. The recent agreement signed by the parties in Vienna back the expectations. Therefore, Iran is going to return to the global market of crude oil as a major player, thereby only adding the fuel to the fire by increasing the overall oil supply in the global market.
