Saudi Arabia wants crude oil prices to rise to around $60 a barrel in 2017, five sources from OPEC countries and the oil industry said, according to Reuters.
This is the level the OPEC heavyweight and its Gulf allies – the United Arab Emirates, Kuwait and Qatar – believe would encourage investment in new fields but not lead to a jump in U.S. shale output, the sources said.
Since OPEC and 11 non-OPEC countries signed a deal to cut production in November 2016, the barrel price has risen by more than 14%, but it is still only trading around $56 a barrel, Yeni Safak informed.
Over $1t worth of oil projects have been canceled or delayed since mid-2014, when barrel prices started to fall. A decline in investments in future oil projects triggered worries that this could lead to a supply shortage and spike in oil prices.
Oil fields take around four years to develop before production can start whereas U.S. shale oil can now be extracted within a few months of a decision.
“In general, something around $60 this year is good. $60 will not encourage that big increase in shale,” said one OPEC source, adding that shale oil production is expected to grow by about 300,000b/d this year.