Mohammad Al-Shatti

KUWAIT: A Kuwaiti oil analyst has forecasted the price of Kuwaiti oil barrel would drop to $27 per barrel next February, affected by the pumping of Iranian oil into the markets and the decision to lift the ban on exports of US crude oil.

International oil experts all agreed that such factors, mainly pumping about 500,000 Iranian oil barrels daily will lead to a drop in GCC's oil prices, analyst Mohammad Al-Shatti said yesterday. Brent crude oil's price is expected to drop to $32 pb, as the amount of offered oil in markets will prominently increase, Shatti added.

Meanwhile, the analyst noted that the situation is tense in the oil sector with producers competing to keep stable prices and avoid losses. The expected rise of oil offer indicates that prices will reach their lowest point in the first half of 2016. Oil demand that meets the amount of demand is the main challenge facing producers in 2016, said Shatti, adding that expectations for the rate of demand is between 1.2 and 1.8 million barrel per day.

The analyst further said that the severe drop in prices will encourage more international consumption of oil, thus, increasing the rate of demand. Oil demand is also associated with the performance of China's economy, the country's economic reforms and industries' conditions.

During 2015, OPEC's production rate was recorded at 31.1 million barrel per day, while in November of the same year it reached 31.7 million barrels per day, said Shatti. These rates were recorded without the expected production of Iran, Iraq and Libya that will pose a challenge to prices and demands in 2016, he explained.

As for the impact of the US oil market on supply and demand in 2016, the analyst said that the approval to sell US shale oil will have several effects. Selling shale oil will increase the profits of US refineries through importing US light crude and exporting medium and heavy crude oil, he noted. - KUNA