Oil To Become More Expensive, New Oil Shock To Occur By 2020

New oil shock may occur by 2020 and oil, which is marketed today, could become more expensive by three times within three years, especially as the US production will stabilize in 2017 and will start to decline as from 2018, Algerian oil and energy expert, Mourad Berrour, told Echorouk.

He commented on the gains that were made by oil prices in the international markets at the opening of the weekly trading, which reached $ 57 a barrel, saying that the decisions that were taken by OPEC at the meeting of last Nov. 30, about a reduction of 1.2 million barrels per day, gave positive signals for the oil market, and made the general trend tends to restore the balance of the market between supply and demand.

“Global demand began to rise and the decline of prices was caused by the decline in global demand and a surplus of production from within the Organization of Petroleum Exporting Countries “OPEC”, in addition to the schist oil in the United States”.

“Continued decline in prices over the last two years, could be interpreted as an extension of the economic crisis of 2008, which caused a slowdown in the global economy, despite a drop in energy costs over the last two and a half years”.

“Global demand is currently rising, and China has begun reorienting its economic model, as the market responded to the decisions of OPEC”.

“Oil market will pass a warning stage in the coming months, and waiting for the commitment of OPEC members to implement the decisions that were taken, we must share the sacrifices between Member States, as is the case for members from outside OPEC which will be careful about the commitment of the members of the OPEC or not in the terms of the agreement”.

Regarding the possibility of the impact of the US schist on the oil prices, the spokesman explained that the number of wells in the United States declined from 1600 in 2014, to about 500, adding that high prices push each other to return to activity, especially that the cost of exploitation shrunk with the technological development, as the production of one barrel may be done at a cost of $ 25 in South Dakota, for example.

“But US reserves are not huge, as some believe (44.5 billion barrels) unlike Libya, Saudi Arabia, Iraq and Iran. US production will stabilize in 2018, and it is currently in the range of 8.6 million barrels per day, and will begin to decline starting from 2018”.

“Oil prices may remain, during 2017, at a level of between 55 and 60 dollars per barrel, and probably will step up more above this level in view of the market data”.

“Algerian authorities should be strong while facing oil prices and the financial crisis. Algeria has the financial means to cope with the situation”.

“Algeria must not increase its production of oil and fuel, because what we are selling today will be sold by three times of the current price within 5 years only”.

“Personally, I expect a new oil shock in the market between 2020 and 2025”. 

“The investments that have fallen and shrunk so much will have negative impact on the demand, and there will be an oil shock as from the year 2020. So, what we are selling today can conveniently be more expensive by 3 times after many years”.