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Oil prices will surge to $77 in 2020- IEA

19 May 2016 18:00 (UTC+04:00)
Oil prices will surge to $77 in 2020- IEA

By Fatma Babayeva

Average price of Brent crude will surge to $77 per barrel in 2020 as supply and demand will balance each other over time, energy watchdog Energy Information Agency (EIA) of the U.S. reported in its Annual Energy Outlook.

The agency expects that the oil prices will continue increasing after 2020 on the background of growing demand.

Recently, Anas Al-Saleh, Kuwait’s Oil and Finance Minister said in his interview to Bloomberg that he believes oil prices to be around $50 per barrel during 2016.

According to the forecasts of EIA, in 2016, Brent prices will average $37 per barrel. Meanwhile, global oil consumption is projected to amount to 95.24 million barrels per day during the current year and go up to 96.78 million barrels per day in 2017.

At the same time, the agency expects global oil supplies to stand at 96.23 million barrels per day in 2016 and 96.99 million barrels per day in 2017.

EIA also expects growth in U.S. oil production - 11.3 million barrels by 2040. This growth reflects higher recovery rates driven by the technology advances and higher prices.

The annual report of the agency read that lower prices will keep the U.S. crude oil production below 9.5 million barrels per day through 2025.

The agency forecasts U.S. oil production to average 8.6 million barrels per day in 2016 and 8.2 million barrels per day in 2017.

The U.S. production averaged 9.4 million barrels per day in 2015, according to the agency’s estimates.

EIA estimates that crude oil production averaged 9 million barrels per day in April 2016, which is 0.1 million barrels per day below compared to the level in March 2016, and 0.7 million barrels per day below than 9.7 million barrels per day level reached in April 2015.

The common belief is that supply drives prices in the global oil market today. The reason for the low oil prices has been pointed the oversupply of oil existing in the market emerged after the U.S. shale revolution. Oil prices experienced a slight increase recently as production in Canada and Nigeria was cut due to the incidents.

Moreover, oil production of ISIS- Islamic State in Iraq and Syria which trades oil that it gets from the territories under its controls in the black market- fell by one third, according to the Pentagon.

Financial factors like strengthening dollar, economic growth of China etc. also among factors having impact on the global oil prices.

After hitting highs of 2016, oil prices experience slight decline on May 18-19. Price for the U.S. Light oil decreased by $0.12 to $48.66 in NYMEX, while cost of Brent crude went down by $0.35 to $49.56 in London ICE.

The price of Azeri Light crude increased by $0.43 to $51.16 per barrel on May 19.

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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva

Follow us on Twitter @AzerNewsAz

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