The limbo stick in the oil price market was lowered again this week — this time to below $34 a barrel. Prices have now dropped 70-percent decline since June 2014 when a barrel cost about $114. This time, an ongoing supply glut, worries about China’s weakening economy and a row between Saudi Arabia and Iran have been cited as driving the price down more.
So how low will they go? According to most experts, prices aren’t likely to rebound any time soon. Here’s a rundown of what analysts are predicting:
It will get worse before it gets better: Though U.S. producers have taken a huge hit in the last year, shale producers have proved to be more resilient and innovative than many thought. The BBC noted that output from shale producers has actually risen to more than 9.2 million barrels a day.
With the major players refusing to scale back production, experts including Goldman Sachs and Paul Stevens, professor emeritus at the University of Dundee and a Middle East specialist, have predicted oil prices could keep tumbling to $20 a barrel.
Prices won’t rise for years: According to a CBS News report, many industry executives including Royal Dutch Shell CEO Ben Van Beurden and BP chief Bob Dudley don’t expect to see prices rebound for “several years.”
Will oil prices climb back to $100 a barrel this decade? Not likely, says Julian Jessop, Capital Economics global chief economist. While Jessop predicts that prices could rebound to $70 by 2017, what was once considered the norm of $100 a barrel oil isn’t likely to return for the “foreseeable future.”