3 scenarios for the future of oil

Oil. Oh, how much we paid attention to it just a month ago. But now it seems that simply too much is going on for us to really pay attention to oil prices and to the industry. The world is simply too fixed on US governmental shutdown at the moment – the longest shutdown in the history of the country, by the way.

But we need to know what is going to happen to the industry in the nearest time as the prices for everything are dependent on oil prices. But, as it proved itself to be impossible to foresee these things all we can do is guess.

So, what is going to happen to oil prices this year?

1. Recovery.

OPEC and OPEC+ countries are now talking about the possible cuts in the global oil output. Some stability in the numbers would be good. For us and for the prices in general. The industry is waiting for at least some kind of stability in the output umbers. And it seems that those, responsible are ready to give that to us.

There is only one little problem – Russia and Saudi Arabia are strongly against the lower output volumes as the economy of the countries are totally dependent on oil. And while Saudi Arabia might find other industries to dominate in, Russian ruble is totally tied to the performance of Brent in the world arena. So it is likely that Russia is going to try sabotage the stability.

We really hope that that prognosis never fulfills itself. We really need to see recovery in the field. And it plays well for us that the majority of the players are ready to give it to us.

2. Fails.

On the other hand, even more fails might be in the way for oil industry. We are already seeing instability for the crude. it is either having horrific losses or rapid gains. That doesn’t really look like stability. What is that about then?

Well, it is no secret that a lot of people have switched to electric cars, protecting the environment is the priority for humanity at the moment and a lot of us are ready to make necessary changes to our lifestyle in order to make the environment cleaner and safer. That is the main foe for the oil industry at the moment. And while that is good in the long run, oil traders are not really impressed.

3. Too early to tell.

We have greased the electric cars topic. And it Is safe to say that it is too early to talk about that. Right now there is no real impact on the oil industry from the electric cars sector.

We are looking at the long and slow perspective before the majority of the population of the planet is going to switch to non-petroleum cars. All due to the higher prices for them. Unfortunately, at the moment it is something of a luxury. And it really shouldn’t be if we are talking about saving the planet.

4. Summary.

Will the price for the crude be stable this year? That is doubtful. In reality the majority of OPEC countries being pro-shortened output doesn’t really work. All of them must be in favor of that in order for it to work. Otherwise we are just going to see a lot of uncertainty and a lot of doubts from traders who are going to be reluctant to invest in oil until they see stability. As a result, investments are only going to flow out of the industry, further undermining the prices.

What do you think is going to happen to oil industry this year?