GIQ Industry Survey: Oil to Average in the $50s a Barrel in 2018

Fujairah, UAE — The average price for Brent crude oil in 2018 will be in the $50s a barrel range, according to 61% of respondents to a GIQ Industry Survey of 250 energy industry professionals operating across the Middle East and Asia.

The relatively bullish sentiment is supported by the International Energy Agency’s (IEA) forecast that global oil demand growth in 2018 will average 1.4 million barrels a day. In its September report, the IEA revised upwards its estimated demand growth for 2017 to 1.6 million barrels per day, Brent crude oil has averaged just above $50 a barrel through the first 8 months of this year.

“It is hard to see any catalyst next year that will push us out of the current range,” said Robin Mills, CEO, QAMAR Energy. “There are plenty of tensions in the Middle East but the market is completely unmoved by those — only a few years ago there was always $10 a barrel premium on the price for geopolitical uncertainty, but that is completely gone, but stocks are still very high and any disruption to the market could be easily covered,” he said.

In the last few weeks alone we have had the threat of Nuclear War surface in Asia, alongside once-in- a-lifetime earthquakes and hurricanes the size of France ripping through the Americas as the U.S. National debt burst through $20 trillion without barely a headline. Yet at the same time, all the major global stock markets are hitting new records.

OPEC’s first assessment of world oil markets in 2018 published in July showed that, despite cutting output, the group is still pumping too much crude. Even though the Organization of Petroleum Exporting Countries delivered on pledges to reduce supply, its output exceeded demand in the first half of 2017, according to a report from the group. Its production was 32.6 million barrels a day in June.

The GIQ Survey respondents by an overwhelming 71% polled that OPEC should continue its supply cut agreement when it expires at the end of the first quarter of 2018, but that said, 29% of respondents were of the view that the oil exporters should abandon their output cuts and stop handing over market share to U.S. Shale oil producers.

Crude oil prices have risen approximately 20% since OPEC/Non-OPEC agreed a 6-month production cut of 1.8 MBPD late last year. The cuts have already been extended 9 months until the end of March 2018, over which time US production has added 500,000 barrels a day.

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