Oil prices could increase up to $100 per barrel in 2016 due to the concerns of members of the Organization of the Petroleum Exporting Countries (OPEC) and because of the cartel’s actions, a report by Saxo Bank said Wednesday.
Earlier in the day, the Danish Saxo Bank published a report “Outrageous Predictions 2016,” which describes underappreciated events that could significantly affect global markets.
“The unease among weaker as well as wealthier members of the (OPEC) cartel over the supply-and-rule strategy continues to grow as the economic pain spreads across the 12-member group… Suitably buoyed, OPEC catches the market on the hop with a downward adjustment in output. That move breaks the downward price spiral and price mounts a quick recovery with investors scrambling to re-enter the market to the long side… At its peak, the price once again brings $100/barrel prices onto the horizon,” the forecast said.
The report added that geopolitical risks in the Middle East could also contribute to an increase in oil prices.
The report predicts the strengthening of the Russian currency, which strongly relies on oil prices, by some 20 percent against the dollar/euro basket due to the predicted increase in global oil demand.
Oversupply of oil products and low demand have more than halved the price of oil compared to summer 2014 levels, when the price of Brent crude stood at about $115 per barrel. Current oil prices are hovering around $40 per barrel.