The oil prices have been trading in the range of $108 to $110 ahead of the OPEC meeting today, but the fresh tensions in Iraq led the oil prices breach above $110 level today, spiking fears about the pressure on oil supply. Alongside this, the pending talks with Iran over sanctions and other factors like Nigeria and Libya continue to weigh upon the oil supply. A CNBC interview with Jason Schenker, President and Chief economist at Prestige economics, aims to find out the growth pattern of the oil prices ahead.
Iran And Iraq
The latest fear comes from Iraq, where it’s Mosul area witnessed fresh violent attacks from militants of al Qaeda this week, new reports suggest that the group has advanced into the oil refinery town of Baiji. While Iraq’s Oil Minister, Abdul Kareem Luaibi said that the country’s export facilities are “very, very safe”, and the violence is far off from the producing oilfields, but the attacks have dampened the risk view attached to the oil supply.
At the same time, the sanctions imposed on Iran for its nuclear program, is also hurting the supply expectations. Schenker said “Iran is taking steps in a positive direction and sees the it want to get back into the world market, and if they are able to do that than there will a short term push down on oil prices.”
Growth Outlook Stable
Further, Schenker projects a mixed outlook for oil prices as in case of increased output from Iran, the prices could witness some pull down. However, the growth across economies like the U.S. and Japan, the accommodating policies as well as the measures taken by the Central Banks across the globe should support growth of oil prices in the next three years. Schenker expects the Brent to be above $110 levels for the remaining part of the year, and expects the oil prices to be in between $110-$120 in the year 2015.
Watch the full video below:
Also today, the U.S. Department of Energy released its weekly inventory report for crude oil stocks which posted a reduction of 2.6 million barrels, which exceeds the expected 1.2 million barrels. Prices went up prior to the report and have been oscillating around the 104.5 level since then.