The strategic oil alliance led by Saudi Arabia and Russia, OPEC+, may lead to a stabilization of oil prices between $60-65 a barrel, according to a global commodities expert.
Edward Morse, Global Head of Commodities Research at Citigroup, and one of the world’s top oil price forecasters told Al Arabiya that the logical sustainable price of oil is at $60 a barrel.
Morse echoed Citi’s primary forecast of Brent Crude in 2019, which had predicted oil to trade between $55 and $65 a barrel. “We have plenty of available evidence from the statements of Saudi ministers, as well as the Russian government – including Russian ministers and Russian President (Vladimir Putin) – that Russia prefers a price between $60 and $65 a barrel,” said Morse in an interview.
“They have the capacity to put more oil on the market, we think they could have still added another 200 thousand barrels of oil a day, not including what they have already put back on the market.”
“I think it’s a logical conclusion to think that around $60 a barrel is something that might be more sustainable,” he added.
Putin announced in November 2018 that $60 a barrel was “absolutely fine.” Oman’s Energy Minister, Mohammed Al-Rumhi, whose country is a member in OPEC+, had previously predicted that the alliance can maintain $60 a barrel.
With regards to the sustainability of OPEC+, Morse said, “There is nothing that's going to unwind it (the alliance) if they continue to have a price in the market that overlaps with their common interest,” Morse added. He added that more needs to be done to solidify Saudi Arabian and Russian ties. “I think it would still require more joint ventures – between Saudi Arabia and Russia – to seal the agreement,” he said.
Top forecaster maintains $60 oil prediction