Not so long ago, OPEC released its World Oil Outlook (WOO). It says that oil prices are going to grow by 5 dollars per barrel each year. By 2020, oil prices will recover to $80 per barrel.
The cartel assumes that the global economy is going to feel better in the coming years and by 2020 the global demand for crude oil will have exceeded 97 million barrels a day. As for 2040, the global demand is expected to reach 110 million barrels a day. At the same time, OPEC expects oil refineries around the globe to boost their overall refining capacity by 20 million barrels a day.
At the same time, OPEC predicts that non-OPEC members won’t be able to boost their oil production to a great extent since such an activity requires a lot of investments while non-OPEC members still cannot afford it and are unlikely to attract enough funds to do back the financing. The cartel says that the global oil industry will need some 10 000 billion dollars of new investments within the next 25 years to flourish. Still, the cartel believes that by 2040 the global production of crude oil will have dropped considerable at the expense of non-OPEC nations, which are expected to exhaust their existing oil fields while the mentioned shortage if investments is likely to make it difficult to find and develop new oil fields to back stable and high oil production in the future. This leads OPEC to believe that somewhere around 2040 the total amount of oil produced by all non-OPEC oil nations will go back to 60 million barrels a day. With that being said, the shortage is going to balance the market of crude oil, gradually eliminating the excessive supply we can see now. This will bring oil prices higher and higher year by year.
As for OPEC nations themselves, they are expected to collectively boost their oil production by 10 million barrels a day within the next 25 years. This is 1 million barrels more then the figures stated in the previous report. This let OPEC experts predict that the OPEC oil basket will cost $123/b by 2030 and $160/b by 2040.
What’ Next?
In July 2015, Garry Ross (the founder of PIRA Energy Group - some of the world’s major oil-exporting companies) predicted that oil prices may recover to $100/b by 2020. His forecast is definitely worth attention since he predicted the oil market crash in 2014.
When talking about the reasons supporting his prediction, he said that that the oversupply of crude oil is not as big as one might think. At the same time, Saudi Arabia is currently producing oil at 100% capacity without drilling new rigs. Thins means that at some point in the near future, the oversupply may vanish in a rather fast way.
Some members of Gaspromneft share this standpoint. They assume that oil is going to get back to 90-100 dollars per barrel in a matter of years. They admit the idea that it may take a year or two but the long-term trend is obviously bullish, they say.
At the same time, a grandson of Saudi Arabia’s first king assumes that oil prices are never going to come back to $100/b. The Russian government is also skeptical about the near-term prospects of crude oil. For instance, the 2016 budget is based on the oil price of $50/b, which is still far away from $35-$32/b we can see now.
