Azernews.Az

By Fatma Babayeva

Oil looks like to be most unpredictable commodity in the global market. Forecasts made on oil prices by the most prestigious organizations and agencies varies lots from each other and occasionally come true.

The main reason for falling oil prices since 2014 has been shown the oversupply existing in the global market by many experts. Oil producing countries' efforts to stabilize the market still encountered failure. The recent gathering of major oil producing countries in Doha was not able to reach an agreement among top oil producers on freezing oil productions on April 17.

Some made positive forecasts on the eve of Doha meeting that the event will boost prices while some considered it meaningless as freezing was not going to be a solution to the oil glut in the market stressing the need to cut oil production.

Oil has turned into highly politicized commodity tool. Supply and demand now are not the only factors setting oil prices in the market most probably.

At the moment, Saudi Arabia, the so called "swing producer of oil", also seems planning the increase of its oil production after Iran’s refusal to freeze production.

Geo-political tensions between these two countries were believed to be the root cause of the failure in Doha. When Iran wants to increase the volume of its oil exports to the pre-sanction level, Saudis seem to prefer bearing low prices over losing its market share.

Some analysts believe that the next OPEC meeting that will take place in June is unlikely going to change the current situation in the oil market either.

Moreover, Saudi Aramco, state oil company of Saudi Arabia announced that it could increase oil production by 200,000-300,000 barrels per day up to 10.3 million barrels per day in 2016 compared to the previous forecast of 10.2 million barrels per day, the review of BMI research company stated, Bloomberg reports.

What’s more, despite the oversupplied oil market, oil prices keep experiencing slight increase. Currently, the oil prices amount above $40 in the market.

The average spot price for various crude brands amounted to $41.03 per barrel last week compared to $40.42 per barrel a week before.

The highest average spot price was experienced in Bonny Light oil which is produced in Nigeria. It cost $43.75 per barrel compared to $43.1 per barrel a week before.

The average price for Brent crude increased by $0.69 to $43.04 per barrel last week. Meanwhile, the average spot price for WTI increased by $0.63 to $41.86 per barrel for the same period.

In addition, the price of a barrel of Azeri Light crude oil stands at $45.62 on the world markets on April 26.

The oil prices are expected to rise to $60 during the second half of 2016, according to the forecasts of many rating agencies.

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Fatma Babayeva is AzerNews’ staff journalist, follow her on Twitter: @Fatma_Babayeva

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