The optimal average price for oil is in the range of USD 60-70 per barrel

22 january 2019 | Ekonomika Segodnya

Oil prices will remain in the average range of about USD 60-70 per barrel, which can be considered a profitable "oil corridor" for all market players, as Alexander Kurdin, Head of researches for the Directorate for Fuel and Energy Economy of the Analytical Center, told internet publication Economy Today.

Alexander Kurdin
Alexander Kurdin
Department for Fuel and Energy Sector

According to the portal, global oil prices are growing following OPEC's statement on oil output cutbacks. Russia is also trying to reduce oil production to the agreed volumes as soon as possible, although the technological limitations are slowing down the process.

According to Kurdin, OPEC's policy is having a positive effect on the prices; however, the presence of disagreements both within the organization and among its members and external partners may hinder the fulfillment of all OPEC's promises.

"If OPEC proves once again its dedication and meets its commitments, forgetting the differences, then prices will grow," said Kurdin. "As for the medium-term period, preserving the deal has a positive impact on the reputation of the cartel and of the countries which signed the OPEC+ agreement. Their actions create the image of a reliable regulator."

According to the expert, an exceedingly aggressive behavior of the cartel and attempts to increase prices even more actively, on the contrary, will not lead to a long-term rise in prices, since there is an additional source of supply in the world market. In his opinion, the optimal average price for oil is in the range of USD 60-70 per barrel, since, on the one hand, this level is acceptable for relatively stable production of shale oil, and on the other hand, it suits the OPEC countries and other exporters, including Russia.

Source: Economy Today