Don’t expect oil prices to rise much next year and developing markets dependent on commodities are feeling the pinch of falling prices.
Iranian Supply Will Keep Oil Low
Global oversupply and more Iranian production are likely to keep a lid on oil prices next year, offsetting any slowdown in US shale output due to low prices, a Reuters poll showed on Wednesday. Benchmark North Sea Brent crude is expected to average $58.60 a barrel in 2016, slightly above the $56.63 seen so far this year, but well below the forecast of $62.30 in last month’s poll, the Reuters survey of 31 analysts showed.
“Iranian production is likely to pick up pace next year once the country has been certified to have complied with the terms and conditions in the nuclear agreement by the International Atomic Energy Agency,” Vyanne Lai of National Australia Bank said.
Commodity Prices Hit Developing Economies Hard
Slumping commodity prices pose a serious challenge to economic and political stability in developing economies across Latin America, Africa, the Middle East and Asia. According to the United Nations Conference on Trade and Development, 94 developing countries depended on commodities for more than 60 percent of their merchandise export revenues in 2012/13.