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Oil price likely to hit $100 a barrel, says Dubai analyst

  • Emirates NBD director says Opec+ oil cut forestalls disorderly sell off
  • US and European recession ‘isn’t going to be too severe’
  • Higher oil prices not automatically a positive for Gulf industries

Oil prices are predicted to rise higher, with $100 a barrel now looking more likely in the coming months following Opec+’s decision to cut production, according to a senior analyst at Dubai’s largest bank.

Edward Bell, senior director for market economics at Emirates NBD, said the move by Saudi Arabia and its Opec+ partners on Sunday comes as a way to forestall any disorderly sell off in oil prices.

“Opec+ took this precautionary cut of 1.6 million barrels/day to preserve oil prices at a higher level and not risk having a $10-$15 sell off,” he said. 

While there are concerns of a global economic slowdown, especially in the US and Europe, prompted by the tightening of financial conditions by central banks, Bell said he believed the “recession isn’t going to be too severe”. 

“This isn’t necessarily a reaction to anxiety in demand. The idea that China’s recovery is not going to be that strong isn’t the motivating factor for this cut either,” he believed. 

In the exclusive video interview above, Bell also explained why higher oil prices are not automatically a positive for all industries and governments in the Gulf. 

Oil prices surged 6 percent on Monday after the Opec+ announcement and continued to rise on Tuesday, with Brent crude futures up 43 cents, or 0.5 percent, to $85.36 a barrel by 09:25 GMT.

US West Texas Intermediate (WTI) crude futures were trading at $80.89 a barrel, up 47 cents, or 0.6 percent.