OPEC lowered forecasts for price and demand of crude oil

Noam Stiekema

The OPEC lowered forecast for price and demand of crude oil. In its annual review of the oil market the organization states there will be slight decreases in the real value of the commodity during this decade at a constant nominal price of 110 USD per barrel between 2014 and 2020. The forecast for the […]

OPEC forecasts

OPEC forecastsThe OPEC lowered forecast for price and demand of crude oil. In its annual review of the oil market the organization states there will be slight decreases in the real value of the commodity during this decade at a constant nominal price of 110 USD per barrel between 2014 and 2020. The forecast for the US is high, while expectations for the BRICS countries – Brazil, Russia, India, China and South Africa, are reduced in the medium term. The OPEC warned that there is a significant risk of a glut in the oil industry.

In the long term it is expected WTI demand to increase by about 21 million barrels per day to 111.1 million barrels per day by 2040. Developing countries will stimulate demand by 28 million barrels per day, while consumption of developed countries in the composition of the Organisation for Economic cooperation and Development (OECD) would fall by over 7 million barrels per day.

Lowered forecasts come amid difficult times for the oil markets, the price of WTI crude oil fell to its lowest level since August 2011 earlier this week after Saudi Arabia lowered export prices for US raw material. Also last week, Oil Minister Abdul-Mahdi of Iraq, told the country’s parliament that within OPEC is already in a price war, which may cause collapse of oil prices, which ultimately will hurt exporters.

Some members of OPEC, including Saudi Arabia and Iraq, dropped prices and increased production to make sure that it will maintain its market share. The next milestone for the price of oil will be the OPEC meeting in Vienna on 27 November, which is expected to be observed primarily signals the future plans of Saudi Arabia.

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