From forecasting point of view, Saudi Arabia, which just reached a deal to cut its production to 10.065 million barrels in January next year from 10.625 million barrels per day in October this year along with other producers both within and outside the OPEC to cut global production by a total of 1.758 million barrels per day, doesn’t seem too optimistic.
It’s like anybody who thought that the oil deal would skyrocket prices, should think again. In its budget estimate for the next year and ahead, Saudi Arabia forecasted oil price of $55 per barrel for 2017, $61 per barrel for 2018, and $65 per barrel for 2019. This bunch is more of an optimistic one; the conservative forecasts predict $49 per barrel for 2017, $52 for 2018, $55 for 2019, and $58 per barrel for 2020.
One of the major reasons to worry even after such a historic deal is the fracking technology. Corporations using the technology in the United States were able to compete even at a much lower price than originally expected. As the oil price moves higher the supply from the United States are likely to move higher. They are already 400,000 barrel higher per day compared to the bottom earlier this year. In addition to that, these technologies are likely to spread globally, and more countries especially with the deficit ones to exploit their home resources.