Oil price 2018 outlook
Oil prices all over the world have been volatile thanks to swings in oil supply versus demand. The Organisation of Petroleum Exporting Companies (OPEC) reduced output to put a floor under prices. Throughout its history, OPEC controlled production to maintain a $70 price target. In 2014, it abandoned this policy.
The oil price is subject to a vast array of socioeconomic, geopolitical and technology variables.
What the oil price 2018 outlook looks like:
While global oil production has been flat since the beginning of 2015, Asia is expected to be the key driver of demand growth. The region is home to a number of emerging economies, with rapidly rising demand for a range of products. As economic production increases in these Asian countries, so does the demand for oil.
The International Energy Agency expects supply to exceed demand in the first half of 2018.
On the 30th of November 2017, Russia and other non-OPEC producers agreed to extend their oil production restraints through 2018. Therefore, analysts expect a market rebalance in the second half of 2018, so oil prices could increase. A key driver in the expected undersupply of oil has been attributed to accelerating Chinese demand growth.
The global benchmark, Brent Crude oil, closed above $66 per barrel in 2017.
In a Reuters poll of 30 analysts and economists, experts surveyed now expect Brent Crude to average $58.84 a barrel in 2018.
Tensions in Saudi Arabia, Venezuela’s precarious economy and possible production outages in Libya and Nigeria could also be a bullish factor for oil prices. This could lead to sharp rises in fuel prices in many countries, which is also likely to have a tangible effect on the economic outlook as a whole for those countries.