Oman energy minister sees Brent slipping towards $70/bbl – Reuters

Oman's energy minister Salim al-Aufi predicts that Brent will drop to a “much more comfortable” level of around $70/bbl after the winter, in a sharp contrast to analysts forecasts of +$100/bbl levels. PHOTO: Crude oil pump jacks in the desert of Oman. Getty Images

Oman's energy minister Salim al-Aufi told Reuters on the sidelines of COP27 in Egypt that the Sultanate has budgeted on a Brent price of $55/bbl, with any proceeds from sales at higher priced than that going towards servicing debt payments. However, he doesn't expect prices to fall that low.

But he did say that OPEC will consider "oversupply" at the next OPEC+ meeting on 4 December. Higher interest rates and a European recession could destroy demand and contribute towards that.

Al-Aufi's Brent forecast contrasts sharply with recent expectations of higher oil prices from market analysts.

The US Energy Information Administration predicts Brent will average $97.65/bbl in the fourth quarter of this year, and $96.91/bbl next year. In the coming year, supply disruptions and slower crude oil production growth are expected to support prices, while poor economic growth will limit the rise.

Goldman Sachs' global commodities chief Jeff Currie predicts Brent will reach $115/bbl by early next year. Speaking to CNBC, he says that a combination of sanctions on Russian oil, China ending its lockdown, and disappointing US shale production, will create a supply shortage from December.

According to Citi analysts, oil prices could rise as high as $120/bbl if supply disruptions become significant.

Christian Malek of JPMorgan said last month that tight oil supply could cause Brent to soar to $150/bbl if OPEC+ continues to produce below its targets, if US shale output slows down and if demand for crude oil rises.

By Konica Bhatt

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