Baku, Azerbaijan, June 6
By Leman Zeynalova – Trend:
Oil prices are expected to average $53 per barrel in 2017, up 24 percent from 2016, but $2 per barrel less than January forecasts, the World Bank (WB) said in its Global Economic Prospects report.
“Large stocks are expected to unwind during the second half of the year. This will support an increase in oil prices to $56 per barrel on average in 2018, down $4 per barrel from January projections,” said the WB.
These forecasts reflect expectations of increased US shale oil production following productivity gains that have reduced costs considerably, as well as an extension of production cuts by OPEC and non-OPEC producers until March 2018, according to the report.
WB experts believe that downside risks for oil prices arise mainly from the resilience of the US shale oil industry or weak compliance to the production cuts.
Conversely, further disruptions among such countries as Iraq, Libya, Nigeria, Venezuela, as well as commitments to additional production cuts into 2018, could temporarily lift prices, according to the report.
On May 25, OPEC member countries and non-OPEC parties, Azerbaijan, Kingdom of Bahrain, Brunei Darussalam, Kazakhstan, Malaysia, Mexico, Sultanate of Oman, the Russian Federation, Republic of Sudan, and the Republic of South Sudan agreed to extend the production adjustments for a further period of nine months, with effect from July 1, 2017.
The reductions will be on the same terms as those agreed in November.
---
Follow the author on Twitter:@Lyaman_Zeyn