World Bank cuts oil price forecast
By Aynur Karimova
The World Bank has lowered its average oil price forecast for 2015 to $53 per barrel, earlier forecasted at $57 per barrel in its April report.
In a report published on September 30, the World Bank said that the global oil market continues to exhibit significant volatility as OPEC and non-OPEC producers compete for market share.
“Because current oil-price forecasts are subject to both upside and downside risks, the projections presented here include both a lower-bound and an upper-bound scenario. The lower-bound scenario assumes that oil prices will average $50 per barrel in 2015 and $40 per barrel in 2016 and 2017. The upper-bound scenario assumes that oil prices will average $53 per barrel in 2015, $58 in 2016 and $67 in 2017," the World Bank reported.
The World Bank says that this projection assumes that OPEC will continue to refrain from any form of supply management and that there will be no further deterioration in the global economic environment.
“This forecast assumes the maintenance of OPEC’s current policy, the easing of geopolitical tensions, further supply increases (including rising oil exports from Iran), and moderate growth in global demand,” said the report. “These factors, combined with the extent of existing production capacity—especially shale-oil output in the United States—suggests that oil prices will remain low at an average of $53 per barrel in 2016. Low oil prices have also impacted other energy markets, especially European and Asian markets for natural gas.”
In today’s world, the reality is that the price of oil has decreased substantially, by upwards of 60 percent. This negatively affects the economies of not only the oil producing, but also oil importing countries.
Azerbaijan, an energy-rich country with huge production and export prospects, works to build an economic model in accordance with this reality.
The government of Azerbaijan has prepared three separate forecast budget scenarios for 2016, taking into account oil prices in the range of $40 to $60 a barrel: a baseline scenario at $50 per barrel, an optimistic scenario at $60 per barrel, and a pessimistic scenario at $40 per barrel.
The 2016 budget revenue forecast has been created assuming an oil price at $50 per barrel and an exchange rate of 1.05 Azerbaijani manat to the U.S. dollar.
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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