Why Opec thinks oil prices will stay below $100 for a decade

Jessica Morris
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Opec thinks oil will stay below $100 for a decade (Source: Getty)

The Organization of the Petroleum Exporting Countries (Opec) thinks oil will stay below $100 for a decade, and it's worried a low oil price environment won't be enough to snuff out the emerging US shale gas industry.

A report seen by the Wall Street Journal has said that Opec thinks a best-case scenario will see oil prices at $76 a barrel in 2025. And the organisation also warned crude oil could cost less than $40 per barrel in 2025.

"$100 is not in any of the scenarios," a delegate at an OPEC presentation last week in Vienna said, according to the WSJ.

Oil prices slid as low as $45 per barrel in mid-January, having fallen from last year's peak of about $106 in June. A glut in the global supply of oil, as well as waning appetites from once ravenous emerging economies such as China and India are driving the decline.

Opec shocked markets with its decision to hold oil production in November. Up until then it had typically controlled prices by increasing or decreasing production depending on which direction they were heading.

At the time commentators said this was part of its strategy to reduce the profitability of the US shale gas industry, consequently curtailing any further investment in it.

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