The future of oil prices

Given continuing US-Iran tensions and the production cutbacks by Opec and non-Opec producers, oil prices are likely to remain high even in the event of a global slowdown

Opec’s decision on December 7 to cut production to shore up crude oil prices was expected. Whether this will have the intended effect is not clear. The reduction will go into effect in January 2019. The immediate spurt in price is due to the loss of 400,000 barrels per day (bpd) of Libyan exports, as the El Sharara field has fallen into rebel hands. The incident points to continued fragility of the situation, since Libyan production accounts for 1.1 million bpd.

The fall in crude prices has relieved the pressure on oil importing countries for now. However, oil prices are driven