Oil outlook: Arab Opec producers see prices above $70 by end-2015
Oil outlook: Arab Opec producers see prices above $70 by end-2015Reuters

Arab Opec producers expect global oil prices to rebound to between $70 and $80 a barrel by the end of 2015, and are betting that a global economic recovery will revive demand.

Delegates from the Organization of the Petroleum Exporting Countries (Opec), some of them from core Gulf Opec members, told Reuters that they may not see - and some may not even welcome now - a return to $100 any time soon.

But they added that oil prices could begin finding a new equilibrium by the end of 2015 – even in the absence of any production cuts by Opec – when the rapid growth of high-cost producers such as US shale slows and lower prices begin to stimulate demand.

One Gulf oil source told Reuters: "‎The general thinking is that prices can't collapse, prices can touch $60 or a bit lower for some months then come back to an acceptable level which is $80 a barrel, but probably after eight months to a year."

A separate Gulf Opec source said: "We have to wait and see. We don't see 100 dollars for next year, unless there is a sudden supply disruption. But average of 70-80 dollars for next year – yes."

Opec output

Opec, which pumps a third of the world's oil, has repeatedly refused to cut output because it does not want to give up market share.

The second Gulf Opec source reiterated that the cartel will not cut output alone. Non-Opec producers such as Russia, Mexico, Kazakhstan and "anyone producing more than one million barrels per day" should also cut or at least freeze their output if they want a stable market and better prices.

The unnamed sources spoke to the news agency on the sidelines of a meeting in Abu Dhabi of the Organization of the Arab Petroleum Exporting Countries (OAPEC).

Saudi shock

Oil market participants have been left reeling after Saudi Arabian Oil Minister Ali al-Naimi shocked the industry by saying that Opec will not cut production even if prices tumbled to $20 per barrel (bbl).

According to the Middle East Economic Survey, al-Naimi said that the world may never see $100/bbl oil again.

Analysts have warned that weak oil prices could render a number of ambitious oil and gas projects the world over unprofitable, resulting in industry-wide losses as high as $1tr.

Prices have fallen over 20% since Opec refused to cut output on 27 November despite a global supply glut.

Prices have dropped some 50% since their peak in June this year, their steepest fall since the 2008 financial crisis.