Oil prices in 2020 may rise to $75 per barrel, the International Monetary Fund (IMF) said. According to one of the IMF models, it would be possible if OPEC reduces supplies by 7 million barrels per day. "If OPEC cuts supplies by 7 million barrels per day, OPEC's market share will be 35% and the oil price will reach $75 per barrel," the IMF document says.
The experts also say if OPEC cuts its share in the world oil market to 41%, the oil price will be $58 per barrel in 2020. The IMF bases its calculations on that at present the cartel provides 42% of oil supplies to the world market. The analysis notes that OPEC’s ‘pump-and-dump’ strategy drive US companies from the market was not justified.
An associate professor of the Graduate School of Corporate Management of RANEPA, Ivan Kapitonov, speaking with a correspondent of Vestnik Kavkaza, noted that the price of $75 per barrel by 2020 is quite realistic. "The purchasing power of the dollar affects the oil price in dollars. In fact, we are dealing with the dollar inflation. Like other currencies, the dollar may depreciate. Therefore, given the dollar inflation, the oil price of $75 per barrel by 2020 seems quite real, even if the OPEC countries do not cut supplies," the expert believes.
At the same time he pointed out that the reduction of supply by OPEC countries is also quite real, as the current oil prices do not work for anyone. "At present, countries continue the policy of pressure on the US oil and gas shale industry. This policy is very successful. The current price of around $50 per barrel showed that the US oil and gas shale industry is not recovering, as predicted by experts. Therefore, it is possible that by the end of this year or in the beginning of next year, prices will rise to the level of $60 per barrel. If the US oil shale industry continues to weaken, then after two years the price may exceed $60 per barrel, and to achieve the level of $90 by 2020," an associate professor of the Graduate School of Corporate Management of RANEPA said.
In addition, he also linked the IMF forecast that oil prices will rise over $75 per to the dollar inflation. "The dollar rate will strongly depreciate in four and a half years. That is, the fall will be about 10-15% of its purchasing power. If these percentages are added to the current price, the oil price will be about $60-65," Ivan Kapitonov concluded.
A leading analyst of the National Energy Security, a lecturer at the Financial University under the Government of the Russian Federation, Igor Yushkov, in turn, said that the IMF position is strange. "Prior to this, everyone said that the price of oil rose from $28 per barrel to the current price of $50 per barrel, precisely because we are close to restoring the balance of supply and demand. Now the IMF claims that if they reduce the production volume further, the price will rise further as well. So they are offering to create a shortage of oil in the world - it is a strange idea, because there will be no deficit in any case: OPEC's place will be taken by other suppliers," he explained.
"The IMF says that if now the decline in production is due to the closure of offshore projects around the world and the fall of shale oil production in the US, it is necessary to reduce production in the East as well. What it does not realize is that OPEC is an advisory organization now, it practically cannot control prices. Of course, the IMF understands it and saying "OPEC" meaning Saudi Arabia. But how has they reached such a conclusion, if falling prices led to the decline in crude oil production, primarily in the United States? It turns out that Riyadh's strategy has worked. I think the IMF is a lobbyist of US shale companies to some extent, simply offering Riyadh to move aside," the expert believes.
Thus, the International Monetary Fund's forecast tends to affect the specific market participants. "Even if we proceed from the theory that the price is determined by the balance of supply and demand, the withdrawal of some producers from the market will lead to an increase in production by other countries," Igor Yushkov concluded.
