The Organisation of Petroleum Exporting Countries (OPEC) has released a new report in which it states that oil prices may not reach levels above $60 (£48.32) per barrel until around 2020.
In the report, OPEC acknowledged that a number of blunt forces would likely conspire to prevent a rally in oil prices any time soon.
OPEC’s new World Oil Outlook comprises of both long and medium-term predictions for the global oil market, and its Reference Basket (ORB) price is set to average out at $40 per barrel for this year, while group project prices will rise by $5 (£4.3) per barrel every year for the remainder of the decade. Combined, this means that ORB prices will only reach $60 at the end of the decade.
This is a stunning prediction from an organisation of oil-exporting countries, who are better known for more bullish oil outlook reports. However, there are several reasons why OPEC has resigned itself to lower prices for longer periods.
The organisation has admitted that, since it made the decision to abandon market intervention around this time two years ago, things have not gone according to plan. It had thought that lower oil prices would push up demand and price out high-cost oil producers, neither of which came to fruition.
Other factors to have stifled growth in the oil market include the economic crisis, high levels of household debt, high unemployment levels and investment cuts in the oil industry. This all means that companies like Fuchs, which makes Fuchs Reniso C85E, may have to wait a while longer for oil prices to improve significantly.