Oil prices expected to rise above current levels in 2019
Baku, Azerbaijan, Oct.30
By Leman Zeynalova – Trend:
Energy prices gained 3 percent in 2018 (q/q), partly in response to the impending re-imposition of sanctions on Iran by the United States along with continuing declines in production in Venezuela, John Baffes, Senior Economist with the World Bank's Development Prospects Group said in his article.
Oil prices are expected to remain near their current levels—averaging $72 per barrel in 2018 and $74 per barrel in 2019, said Baffes.
He pointed out that the World Bank Energy Price Index rose by 3 percent in the third quarter of 2018 (q/q) and is more than 40 percent higher than the same period in 2017, with strong gains across oil, coal and natural gas.
“For crude oil, prices have been supported by a combination of robust demand and several supply concerns. Production continues to decline in Venezuela, while the impact of U.S. sanctions on Iranian oil exports is expected to be larger than in 2012,” the author believes.
He noted that oil prices are expected to increase to $74 per barrel in 2019 from a projected $72 per barrel in 2018, before easing to $69 per barrel in 2020.
“Prices are particularly vulnerable to additional supply shocks at present, given limited spare capacity among OPEC members and declines in stocks. These shocks include faster than expected declines in output in Iran and Venezuela, geopolitical events, additional sanctions, or natural disasters,” said the article.
Baffes noted that coal and natural gas prices have been supported by strong demand resulting from unusually high temperatures in Europe and Asia, which boosted demand for electricity, but prices are expected to moderate in 2019.
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