More than half of the energy professionals in the United Arab Emirates expect oil prices to reach an average of $40 per barrel this year, a new survey showed.
The poll of 250 energy professionals by Gulf Intelligence also found that 28 per cent expect prices to stay at $30 per barrel in 2016, while 13 per cent anticipate that they will touch $50 per barrel.
A further 7 per cent cited that prices might touch a low of $20 while 3 per cent forecast a high of $60 per barrel.
Comparatively, the same survey conducted a year ago in January 2015 found that 41 per cent of the respondents expected oil prices to average $60 per barrel in 2015.
Oil prices fell to a 12-year low this month as oversupply and dropping demand has continued to weigh on the market. Brent oil is currently hovering around $30 per barrel.
Morgan Stanley has even warned that that a further devaluation of the Chinese yuan could send oil prices into the $20-$25 per barrel range.
“The oil prices are moving lower faster than the oil barrels can come off the market,” said Nigeria’s minister of State for Petroleum Resources Emmanuel Ibe Kachikwu.
He said an emergency meeting of the Organistaion of Petroleum Exporting Countries might be called during the first quarter of this year to address the negative economic impact of sliding oil prices.
However UAE energy minister Suhail Mohamed Al Mazrouei has ruled out any action from OPEC.
“I am not convinced that OPEC alone can unilaterally change this strategy just because we have seen a low in the market,” he said. “We were assuming some level of cooperation when we tried [at previous] meetings, but everyone said ‘it is not my problem’. That left it to the market and I think that was the wise thing to do.”
Lower oil prices have had a major impact on governments across the Gulf region, with many of them announcing spending and subsidy cuts.
Nearly 45 per cent of respondents to the GI survey said that the restrained budgets in the Gulf will be the top macroeconomic factor affecting the oil and gas sector in 2016, followed by China’s economic weakness (38 per cent).
Another 10 per cent attributed the weakening economies in the BRIC (Brazil, Russia, India and China) countries to have an impact on the oil and gas sector while 8 per cent felt the United States’ decision to increase interest rates will be a major factor.