Oil to end 2018 over $75/b: Survey

MUSCAT, SEPT 24 - Brent crude oil will end 2018 at above $75 a barrel, the highest year-end price in 4 years, according to 59 per cent of 200 energy industry executives polled in the United Arab Emirates during the last week. A small pool of 8 per cent were less optimistic and see prices falling to below $65 over the coming months. The Organization of Petroleum Exporting Countries (Opec), which accounts for about one-third of daily global oil supply, should extend its current agreement with non-Opec countries to curb supplies by a total of 1.8 million barrels a day for a third year into 2019, an overwhelming 81 per cent of those polled replied.

The Opec Secretary-General Mohammad Barkindo, who participated in the GIQ Industry Survey, said ahead of the polling, that Opec and non-Opec countries aim to agree a framework for long-term cooperation by December, when the oil producers will next meet in Vienna. “Our determination is to institutionalise this cooperation and to get the permanent framework hopefully by December.”

Brent crude oil, after briefly breaking through $80 a barrel earlier this month, has stabilised a little below the $80 mark for the past week on mixed signals from oil producers — including Saudi Arabia, Opec’s biggest producer — on whether the oil exporters group would pump more in response to the demands of the US President Donald Trump to “get prices down now!”. Brent crude has averaged year-to-date at $71 a barrel.

Trump took direct aim at Opec on Thursday for the second time this year, writing on Twitter: “We protect the countries of the Middle East, they would not be safe for very long without us, and yet they continue to push for higher and higher oil prices! We will remember. The Opec monopoly must get prices down now!”

The reintroduction of unilateral US Sanctions on Opec member Iran starting in November, which will remove about 1 million barrels of oil exports from the Islamic Republic, will prove to be the biggest factor destabilising oil markets over the next 6 to 12 months, 58 per cent of survey respondents reported.

And, the growing trade war between China and the US, the world’s two largest oil consumers, could be the source of greatest supply disruptions over the next year, according to 35 per cent of those polled.

“We anticipate a decline in demand mainly driven by the trade dispute between the US and China, but also monetary policy normalisation which will affect global growth,” said Dr Fahad al Turki, Chief Economist & Head of Research, Jadwa Investment, who also participated in the Survey. “All this will potentially reflect on oil prices. We’re looking at $68 (average) for this year and $73 for 2019.”

Such market uncertainties make Opec Secretary-General Barkindo even more determined to sustain the alliance between the 25 Opec and non-Opec countries, known as the Declaration of Cooperation. First formed in 2017, the alliance reached 147 per cent compliance in May this year. The aim is to bring compliance to 100 per cent to achieve the target of curbing 1.8 million barrels a day and stabilising prices. The meeting of the Monitoring Committee of the Declaration of Cooperation between the 25 countries took place in Algeria.