Asia Pacific oil and gas head of J.P. Morgan said that if OPEC fails to stick to its commitment to lessen oil production over this year, Brent crude costs would have to fight to rise. A meeting was held in early-December which was attended by both OPEC and non-OPEC nations. All countries agreed to take off about 1.2 million barrels a day from oil market for 6 months initially starting in January, amidst consistent imbalance between worldwide supply of and demand for oil. Scott Darling said on Wednesday that following through the proposed plan will help in achieving low-oil-price scenario ($55 Brent for 2019). According to Asian hours, Wednesday afternoon saw Brent trading down about 1% at $53.28.
Darling said that weaker demands for crude as well as uncertainty over absolute compliance from OPEC countries, which includes Saudi Arabia, will mean weaker oil prices in 2019. During recent times, Saudi has increased production by over one million barrels each day which it will now try to reduce by around 900,000 barrels each day in merely 2 months. Amidst struggling oil prices, some believe that the kingdom is in need of Brent crude to witness a significant rise and attain a balance in its budget.
2017 saw the worst annual loss in oil prices since 2015 with Brent falling around almost 20% and US crude witnessing a roughly 25% decline as softening demand predictions, geopolitics and stock market volatility riled the energy market. Oil prices could also rise, according to Darling, due to geopolitical issues in places like Venezuela. He added that some regions across the globe has still got aging oil infrastructure, leading to unplanned maintenance. In November, J.P. Morgan predicted that price of Brent crude will be $73 per barrel on an average in 2019 which is lesser than a previous forecast of $83.50 per barrel. This is partly because of a rise in supply in North America in the second half of the year.