- Oil prices could drop to around $70 a barrel after this winter, according to Oman energy minister Salim al-Aufi.
- "We don't believe that the current prices are sustainable comfortably," the OPEC+ member told Reuters.
Oil prices could see a steep drop after this winter, as current levels are unsustainable, according to Oman's energy minister Salim al-Aufi.
"We don't believe that the current prices are sustainable comfortably," the OPEC+ member told Reuters at the United Nations Climate Change Conference on Tuesday. He predicted prices to ease to "a much more comfortable position" around $70. Oman has prepared for prices to fall to $55 a barrel, although Aufi believed that target was unlikely.
A price drop is contrary to what others in the industry have predicted, with UBS warning that crude oil could touch $125 a barrel if Russia retaliates against US-led plans to cap Russian oil prices, and Citi bank warning oil could hit $120 if supply continues to tighten ahead of winter.
But prices in the months ahead will largely hinge on the upcoming OPEC+ meeting on December 4, Aufi said, where the cartel is expected to react to how supply shortages have slammed Europe's economy. That damage could soon be exacerbated by European Union's ban on Russian oil, which will fully kick in December 5, along with expectations for the bloc to support the US-led price cap. The measure could lead Russia to slash its oil off the spot market, spiking prices even higher and worsening inflation.
Aufi predicted that if Europe entered a recession, OPEC+ could reconsider if there was an oversupply of oil, which was the rationale that led the group to trim its output by 2 million barrels a day in November. That move sparked outrage in Washington and caused oil prices to surge, though the cartel saw evidence of oversupply at the time, Aufi said.
"We saw the numbers, we felt there are signs of recession, strong messaging of recession coming from Europe, from the Far East, China of course, and there were indications that there is an oversupply to the market," he added.
Crude prices have been on a rollercoaster ride this year amid western sanctions on Russian oil, causing Brent crude oil to briefly touch highs of around $120 this year. Brent has since cooled to around $95 a barrel and West Texas Intermediate crude has eased to around $89 a barrel as of Wednesday.