Uncertainty continues in oil prices

Having a crucial role regarded as an engine in the global economy in developments of the countries, the oil prices uphold its fluctuation mode since the last two years.

On the one hand ups and downs in crude oil prices and uncertainties seemingly will continue, on the other hand this situation urges the world economies to remain vigilant.

The fluctuations in oil prices are similar with the global growth which has not found stabilization and wanted growth rate since the global economic crisis happened 8 years ago because of being a crucial component.

Meanwhile, the countries predominantly depend on oil production in their economic activities should make structural reforms in order to adapt to this situation. 

Situation is also not convenient to produce more oil in MENA countries which characterizes the oil production region with regard to conflicts, skirmishes, strife and terror.

Regarding this which refers to lesser oil supply than the current condition, the crude oil prices plunged drastically.

Some countries such as Iraq and Libya in this region potentially have noteworthy crude oil production capacity also Iran can be added to this category regarding removal of the sanctions. When the unsuitable conditions reach recovery in MENA countries, oil supply might be higher than the current amount.

As known in the last two years the crude oil prices pursued a downward trend and dropped up to $26 a barrel in February from over $100 a barrel in June 2014.

After seeing that price, the oil prices neared 2016 highs in May in line with supply disruptions and output cuts. Brent crude futures traded at $49.31 per barrel.

Late May the price of oil has gone above $50 a barrel for the first time in 2016. In this, wildfires in the western provinces in Canada as well as falling of oil inventories and the supply disruption are shown the reason for rising of the oil prices.

According to the analysts, oil prices would hit $50 a barrel in the second half of 2016 and $60 by the end of 2017.

Another view predicts that the prices would be between $50 and $55 a barrel in 2017, however for the possible price rises would urge the additional rigs to be installed to rise crude oil output when it exceed $50 a barrel.

For Brent oil price, $50 a barrel is regraded a psychological barrier and can rise over that and also it would not be a sustainable increase above $50 a barrel.

In conclusion, following declination since June 2014, from over $100 a barrel to under $30 a barrel, the oil price might be passing towards upward trend. Expectation for the end of the year, oil price would hit $60 per barrel. According to the forecasts for the upcoming years, the oil price would increases by $80 a barrel in 2017, $75 a barrel in 2018 and $70 a barrel in 2019.

These predictions indicate that uncertainty in the oil price that will continue depending on the other global developments in the upcoming years.