Abu Dhabi: Oil prices are expected to remain volatile in the coming days as Opec and its allies mull production cuts to balance oil markets, analysts said.

“Oil prices will remain volatile in the next few days or weeks till Opec led by Saudi Arabia agrees to cut production. However, it is unlikely that oil prices will drop further on sustained basis, that is more than few weeks,” Garbis Iradian, chief economist for Mena at Institute of International Finance (IIF), told Gulf News.

Brent crude, the global benchmark, plunged 6.1 per cent to a one-year low of $58.80 when markets closed on Friday. West Texas Intermediate (WTI) was down by 7.71 per cent at $50.42 per barrel.

“I think eventually Brent oil prices will remain between $60 and $70 per barrel. This is the range of oil prices that is acceptable to most Opec members, Russia and the Trump administration.”


He said the recent drop in oil prices was successfully engineered by US president Donald Trump by urging Saudi Arabia to increase crude oil production in the past five months and by providing waivers for eight countries to import oil from Iran. “As a result, Iran’s exports of crude oil will remain significant at around 1.5 million barrels a day.”

Analysts also expect substantial production cut announcements from Opec and its allies when they meet in Vienna on December 6 as oil prices drop due to oversupply.

“As the price continues to crumble, the expectations for a substantial production cut from Opec and others will go up. Reports have already been talking about a cut in the region of 1.5 million barrels per day,” said Ole Hansen, head of commodity strategy at Saxo Bank.

He said combination of rising production from the world’s three biggest producers, demand growth concerns into 2019, and Iran taking a smaller hit on its exports than was expected have turned the market upside down. “Seven consecutive weeks of selling has seen WTI (West Texas Intermediate) crude oil collapse from a four-year high to give back half of the gains achieved since hitting $26 per barrel some 34 months ago.”

Markets will also focus on G20 meeting in Buenos Aires during the weekend, where the world’s three largest producers represented by US president Donald Trump, Russian president Vladimir Putin, and Saudi Crown Prince Mohammad Bin Salman are expected to meet and discuss oil markets.

Saudi Arabia’s oil minister Khalid Al Falih earlier this month hinted Opec and its allies are looking at trimming supplies by one million barrels per day to balance oil markets.

Meanwhile, Trump celebrated lower oil prices by tweeting: “Oil prices getting lower. Great! Like a big Tax Cut for America and the World. Enjoy! $54, was just $82. Thank you to Saudi Arabia, but let’s go lower!”