The trade war was expected to bring prices up these past few weeks, especially for oil.
But according to UAE’s Energy Minister, Suhail Al Mazrouei, this might, in fact, be very unlikely.
“It may affect the cost of drilling, the cost of completion, but I think overall the effect is going to be minor to the oil prices,” and added, “I’m not that concerned about a trade war getting to the oil market.”
A recent Jadwa Investment report says current $70 per barrel (pb) will not last for long.
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OPEC and non-OPEC oil producers worked on cutting oil production by 1.8 million barrels per day (bpd) over the past two years.
They are continuing with this strategy until end 2018 and perhaps beyond.
The idea is to bring down global oil storage numbers down to 5-year averages.
According to Mazrouei, the cut has solved “85% of the problem.”
Brent crude had gone up 1.5 percent in 2018.
But one announcement saw a sudden fall of 2.5 percent on Monday after China imposed retaliatory tariffs on U.S. goods.
However, OPEC and producers are possibly thinking of changing the five-year average of crude inventories in developed economies, and are thinking of adopting a different measurement, said Al Mazrouei.
He also added that OPEC and other producers had held talks about instead incorporating a seven-year inventory average, according to delegates from the group.
“I would prefer to focus on achieving the mission first,” Al Mazrouei told Bloomberg TV.
Prices of oil per barrel are predicted to fall
According to Jadwa Investment report predicts that oil is expected to fall from 2018 January’s highest price since 2014 of $70 pb to $60 in 2018, and maybe $65 in 2019.
Fahad Alturki, chief economist and head of research at Jadwa said it is likely because there is an increase in oil producers as of recent years.
The report also states that in 2018 there will be higher volatility in oil prices.
This is due to producers such as Venezuela, Nigeria, and Libya facing geopolitical, technical and economic difficulties.