SINGAPORE (Reuters) - Oil prices may rise to $60 a barrel by the end of this year or by early 2018 as OPEC and non-OPEC producers are expected to extend supply cuts beyond March, while oil inventories continue to decline, a former Saudi energy ministry official said in a speech Washington on Monday.
"With the current arrangement and commitment of major producers, and their willingness to adjust and extend the agreement, I believe as commercial oil stocks continue to contract, oil prices will gradually increase. We even might hit $60 per barrel before the end of this year or the beginning of next year," Ibrahim al-Muhanna said, according to a transcript of the speech received by Reuters.
Global commercial stocks are being drawn down gradually, more slowly than initially hoped, and oil demand is growing by more than 1.5 million barrels per day this year, with robust growth forecast for next year, Muhanna said.
"Some market analysts have argued that once the agreement ends, the producers will flood the market with new supplies but this view is shortsighted. After all, it is in the best interest of producers to create a soft landing and not disrupt the market's newfound balance," he said.
Muhanna, who spoke at an industry event in Washington, is now an independent consultant after recently retiring as an adviser to the Saudi Energy Ministry.