Future world prospects for oil and gas prices

A slow recovery is expected due to global oil oversupply, stagnated growth of the Chinese national market, and increased alternative energy sources, such as LNG, CNG, ethanol or hydrogen.

“We are not banking on an oil price recovery overnight. It will take several years but we do believe fundamentals will return," Andy Brown, Shell's upstream international director, told Reuters.

For the near future, Shell expects a slow increase in crude oil prices from today´s $58 a barrel, with an estimated average of $67 a barrel for 2016 and a further $75 a barrel for 2017. 

Lower crude oil prices have had a mixed reception across the globe. In the U.S., fuel consumption has been at its highest peak since 2007, with Americans driving more miles with bigger cars. Meanwhile, Europeans are also taking advantage of lower prices, with gasoline consumption decreasing as diesel plays a bigger role each year.

But it is the sluggish Chinese consumer market that has especially affected oil companies´ market expectations. As China´s growth slows, their demand for petroleum products has followed suit.

Strategic oversupply and a raising market player

Oversupply of crude oil was worsened by the Organisation of Petroleum Exporting Countries (OPEC) refusal to lower their oil production earlier this year.

According to Kieran Cooke, writing for The Guardian, the decision seeks to drive the fracking industry “from boom to bust”, with important producers like Saudi Arabia playing the long game by driving down prices due to frackers’ need for a minimum of $60 per barrel to break even.

With the nuclear deal between Iran and the U.S. international sanctions will be dropped and the Persian giant will be making a full return to the crude oil market. From the start of 2016 Iran will aim at reclaiming their place as the OPEC´s second largest producer, with their oil exports possibly lowering international oil prices ever more.