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News

Oil can be in short supply as soon as next year

15.12.2016.

Reduction in production of “black gold” recently agreed by oil petroleum exporting countries and 11 states not being part of the cartel can result in demand outweighing supply and even outright shortage of this commodity, according to forecasts by International Energy Agency (IEA).

Right now the supply of oil exceeds demand by a million barrels a day (the global economy consuming a total of 96 million barrels daily). Next year the demand is expected to grow by that same million, the market reaching equilibrium.

And if OPEC sets off to immediately and fully meet the production reduction goals, the market will likely face a shortage of 0.6 million barrels as soon as first half of 2017, IEA experts believe. Shortage is rarely a positive phenomenon. But shortage of oil can drive prices up, strengthening the ruble while US dollar and Euro will continue falling.

“Do not forget the USA though. As soon as oil prices hit $60, they will unpack their mothballed wells. They can do this, as they have not signed any agreements with OPEC and have no commitments. And it’s quite feasible for the prices to go that high, even by the end of this year. But in spring, as the heating season is over, they will most likely return to around $50”, says Alexey Vyazovskiy, Chief Analyst at Kalita-Finance financial group.