High Oil Prices Unsustainable, say Analysts

Morningstar analysts believes the US shale industry will eventually throw oil markets back into oversupply and prices will fall

Joe Gemino 3 October, 2018 | 10:13AM

Oil prices

Global oil prices have recently hit a four-year high as looming sanctions on Iran and dwindling output from Venezuela tighten supplies of crude.

Crude fundamentals continue to look healthy despite OPEC's June decision to increase production by 600,000 barrels a day beginning in the third quarter of 2018. OPEC's cuts have largely served their purpose, with oil inventories having shrunk considerably in the past several quarters. We had always projected that OPEC and its partners would eventually turn the taps back on, given OPEC's lack of history sustaining longer-term production cuts.

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About Author

Joe Gemino  is an equity analyst at Morningstar

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