Analysts Expect Oil Prices to Temporarily Rise by as Much as 13 Percent
One of the major factors keeping vehicle sales so high at the moment is the inexpensive price of oil. Estimates suggest that the price of oil is preparing for a major shakeup during the upcoming months.
In fact, the price of crude oil could rise by as much as 13 percent.
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OPEC’s top member, Saudi Arabia, is currently in the process of reducing oil output. Even with as much oil as the U.S. is preparing to produce during the upcoming year, it may not be enough to fill the gap.
Further complicating the situation is political uncertainty in Venezuela. With Venezuela being one of the world’s top oil producers, any political upheavals could send the country’s oil output plummeting.
There has already been an export reduction of at least 100,000 barrels of oil a day from Venezuela. Further complications could result in 300,000 barrels a day being lost.
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All the while, demand for oil is on the rise, thanks to strong economies in some of the world’s largest markets. Chinese credit surged earlier this year, while consumer spending is up in India, France, and Italy. The U.S. economy also continues to be very healthy.
All of these factors could send the price of crude oil climbing, with estimated costs between $70 and $75 a barrel. Fortunately, most analysts expect this to be a sharp but fleeting price spike for the oil industry.
Estimates still place the price of oil at the end of the year settling somewhere around $60 a barrel. Yet, any number of factors could affect the price of oil, so the sudden price increase could very well last longer than expected.
News Source: Bloomberg