Hasan Qabazard, former director of research at OPEC, said the Brent crude oil price will fall to at least $40 per barrel later this year.
Qabazard cited more oil production by Iraq and Iran, along with recovering shale oil, as the reasons why a drop will be expected.
Currently, the Brent crude oil price is hovering nearly $70 per barrel after a sharp drop last year from more than $100 per barrel.
In 2009, Qabazard predicted the price of oil possibly falling, although it rose a few months later.
Still Qabazard is not alone in believing the price of oil will fall as Goldman Sachs reported last May how the price of oil may go as low as $45 per barrel. In fact, analysts at the bank believe there is no equilibrium between the supply and demand of oil:
We find that the global market imbalances are in fact not solved and believe that the rally will prove self-defeating as it undermines the nascent rebalancing,
OPEC recently finished a conference in Vienna, Austria, where the group decided it would not cut supply.
Qatari Minister of Energy and Industry Mohammed Bin Saleh Al-Sada spoke on the first day of the meeting and mostly blamed the drop in oil prices on “speculators.”
Al-Sada also suggested recent conditions were tough for countries producing oil:
The current environment is clearly challenging – and has become a test for both oil producers and hydrocarbon investors,
Saudi Arabia’s Minister for Petroleum and Mineral Resources Ali Al-Naimi said early last week the market was stabilizing and the current strategy by OPEC was working:
You can see that I am not stressed, that I am happy,
Meanwhile, Iraq is seeking to increase its crude oil exports to get as much money as it can after the massive drop in oil.
Adil Abdul-Mahdi, the country’s oil minister, previously told reporters how oil prices would rise to $75 per barrel by the end of this year.
In terms of Iran, Iranian Petroleum Minister Bijan Namdar Zangeneh said, before the conference in Vienna, how Iran would sell on the market whether OPEC liked it or not:
We don’t need permission from OPEC to return to the market. This is our right, we were limited by sanctions and this is completely normal if we return to the market with the ceiling we had before [the sanctions were imposed],
Moreover, Zangeneh said foreign oil companies were interested in coming back to Iran once the internationally imposed sanctions against Iran were removed.
ExxonMobil hired a lobbyist to “monitor congressional activity” over anything Iran related, although the firm insisted it had done no such thing.
Based on a report by the Energy Information Administration, the United States is estimated to produce even more crude oil in the next few years:
Total U.S. oil production is projected to increase 23 percent between 2014 and 2020. After 2020, tight oil production declines, as drilling moves into less-productive areas,
Qabazard may be right after all.
*Creative Commons Licensed Image by pontla