A recent report by Jadwa Investment has revealed that oil prices are hovering around $70 per barrel (pb) amid fears of the US government withdrawing from the 2015 Iran nuclear deal and re-imposing sanctions.
The prices have risen 18 % quarter-on-quarter in Q4 2017, to $62 pb. Prices rose further to $70 pb in January 2018, the highest level since November 2014 owing to an improving global economy and tighter oil markets.
The report by Jadwa investments says that prices will fall $60 pb in 2018 and $65 pb in 2019. The report further notes that oil markets will likely see higher levels of volatility during 2018. Recent turbulence in global equity markets is also likely to continue, especially as speculation mounts that interest rates could be raised again by the US Federal Reserve.
another factor oil producing nations are witnessing rising political risk. The Venezuelan economy is teetering, while Nigeria and Libya face turbulent elections.
Fahad Alturki, chief economist and head of research at Jadwa said, “The reason for this likely correction will be twofold. There will be increased supply from additional sources. And the OPEC agreement, which will be renegotiated this June, is going to be hard to maintain if oil stays at this level.”
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