The world’s largest trading companies said on Wednesday they did not expect crude oil prices to fall below $65 a barrel, and that they could even exceed $100 next year, with the decline of Iranian oil exports due to US economic sanctions on Iran.
Oil rose this year amid expectations that the sanctions, which are to be implemented on Nov. 4, will test the ability of OPEC and other major producers outside the Organization to close the supply gap with the decline of oil shipments from Iran, an OPEC member.
Brent crude hit $86.74 a barrel last week, its highest level since 2014. The International Energy Agency predicts that emerging markets crises and trade disputes in 2019 could affect global oil demand while output rises outside OPEC supply volumes. Market experts say they will not be surprised if oil prices reach more than $100 next year.
Crude prices are expected to reach the price of $85-90 a barrel before the end of the year, as the release of US strategic oil inventories will likely have limited impact. The US sanctions imposed on Iran will be very difficult. US waivers would be very limited, if any, since the goal is to change the regime in 2019.
US infrastructure restrictions will limit US crude exports that could be compensated or the new refining capacity on the Internet in 2019 will increase further distress. But traders said they expected some deterioration in demand in emerging market economies, which could help curb oil prices.
Others expect crude prices to fall next year to $70- $75, citing a slowdown in demand growth and a market with huge supply, and say that there will be some Iranian exports, but the volumes will depend on the price. If the price of oil rises to $100 a barrel, exports will fall, but if it stays at around $80 a barrel, they may rise slightly.
Meanwhile, a third view by experts went to more pessimistic statements, notably the Vitol and BP, which expected oil prices to drop to $65 a barrel. They said that the question is whether the US pipeline in the Permian field will be able to achieve a significant increase in the second half of 2019.
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