The document discusses the outlook for crude oil prices. It states that crude production is expected to increase due to new technology and low production costs in many countries, leading to excess supply in the market. Meanwhile, falling global demand and economic slowdown are causing a sharp drop in oil prices. OPEC is maintaining its crude output, while the US is self-sufficient in oil and Iran sanctions may be lifted, adding to oversupply and keeping prices low going forward. A chart shows the total production costs and market share of different countries, with many able to produce crude profitably at low prices.

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Outlook: Going forward, it is estimated that crude production is expected to increase with the introduction
of new technology as shown in the figure, above coupled with low of cost of production for many countries
will lead to surplus in the market. Moreover, fall in the world demand for the oil along with global economic
slowdown is resulting to sharp plunge in the oil prices. With Organization of Petroleum Countries (OPEC)
maintaining its crude production at 30 million barrels per day in cartel's December meeting, United States
being self sufficient and potential lifting of Iranian sanctions will lead to excess crude supply and hence, low
oil pricesare hereto stay in near future.
Over Supply
Plunges
Crude Prices
Jan 1st , 2016
$5 $6 $7
$12
$15 $15 $15 $15 $15 $16
$20 $20
$30
$40
$82
$105 $105
13.0%
3.7% 4.2%
13.1%
1.7%
4.1%
2.7%
1.1%
2.2%
1.9%
0.6%
3.1%
12.2%
1.9%
2.6%
4.8%
0.4%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
0
20
40
60
80
100
Total Cost of Production (Marginal + Transport) ($bbl) 2014 v/s Percentage (%)
Contribution to World Crude Supply
Total Cost of Production (Marginal + Transport) ($bbl) 2014 % Contribution to World Crude Supply
% Wrld
Contrib
Source: BP Statistical Review June 2015 & Illustration James Scherrer 2014

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Date: 2016.01.01 12:31:56 +05'30'