The average price for Brent crude oil in 2018 will be in the range of $50 (AED183.5) per barrel, according to 61 per cent of respondents to a GIQ Industry Survey of 250 energy industry professionals operating across the Middle East and Asia.
The survey was conducted by Gulf Intelligence (GI), a UAE-based strategic communications consultancy.
IEA forecast match
The relatively bullish sentiment is supported by the International Energy Agency’s (IEA) forecast that global oil demand growth in 2018 will average 1.4 million barrels a day.
In its September report, the IEA revised upwards its estimated demand growth for 2017 to 1.6m barrels per day, as Brent crude oil has averaged just above $50 a barrel through the first eight months of this year.
“It is hard to see any catalyst next year that will push us out of the current range,” said Robin Mills, CEO, QAMAR Energy, an energy advisory firm.
“There are plenty of tensions in the Middle East, but the market is completely unmoved by those – only a few years ago, there was always $10 a barrel premium on the price for geopolitical uncertainty, but that is completely gone, but stocks are still very high and any disruption to the market could be easily covered,” he said.
The Organization of Petroleum Exporting Countries’ (OPEC) first assessment of world oil markets in 2018, published in July, showed that, despite cutting output, the group is still pumping too much crude.
Even though OPEC delivered on pledges to reduce supply, its output exceeded demand in the first half of 2017, according to a report from the group. Its production was 32.6m barrels a day in June.
An overwhelming 71 per cent of survey respondents said that OPEC should continue its supply cut agreement when it expires at the end of the first quarter of 2018.
However, that said, 29 per cent of respondents were of the view that the oil exporters should abandon their output cuts and stop handing over market share to US shale oil producers.
Crude oil prices have risen by approximately 20 per cent since OPEC/Non-OPEC agreed to a six-month production cut of 1.8m BPD late last year.
The cuts have already been extended by nine months until the end of March 2018, over which time US production has added 500,000 BPD.