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Oil prices to surge above $40 threshold, says ex-Hungarian official

Oil prices to surge above $40 threshold, says ex-Hungarian official

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Date: 29 December 2015 17:17

Baku, Azerbaijan, Dec. 29

By Anakhanum Khidayatova – Trend:

By the end of the next year, oil prices will be above the $40 per barrel threshold, said Levente Kozma, the former Hungarian senior foreign policy adviser.

Speaking to Trend Dec. 29, Kozma said the oil prices below $40 aren’t healthy for the global economy.

“The prices are currently in the mid $30s per barrel. This implies a fallback to the early 2000s level of around $30, but not significantly below. At this price it is likely that there will be an important decrease in investment and production that should see a sustained – and perhaps rapid – recovery [in oil prices],” he said.

The expert went on to name the “key drivers” of the low oil prices.

He said the one of the reasons for low oil prices is the supply driven market caused by lifting of a 40-year-old ban on US producers’ exports and the removal of sanctions on Iran, which is expected to enter the market, while the 13-nation OPEC isn’t willing to restrain its oil production.

“By raising the base rate, the FED [the US Federal Reserve System] is fuelling the strengthening of dollar, which as well leads to the fall of the oil prices,” he further explained.

He also said one of the reasons for low prices is the reduced demand from big consumer countries, like China.

Edited by SI

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