Saudi Arabia Budget Predicts 2017 Oil Price Around $60

Monday Price Slide on Iran Output Concerns

Saudi Arabia Budget Predicts 2017 Oil Price Around $60

Saudi Arabia, the world’s biggest oil producer, has based its national budget on expectations that 2017 oil prices will average somewhere between $55 and $60. The country’s revenue figures are based on an assumption of $55 a barrel at output of 10.1 million barrels a day, which is in line with the OPEC agreement. Budgeting at $55 a barrel suggests that the Kingdom expects that to be a conservative minimum average for the year and would be hoping for closer to the $60 mark.

In the shorter term, oil prices have dipped on Monday over evidence that Iran is increasing production and sales, undermining the efforts of other OPEC exporters. The country negotiated an exemption to OPEC cuts in order to regain market share following the lifting of international sanctions on the country. It has reportedly been taking advantage of the recent oil price rises to sell 13 million barrels of oil that had been stored at sea on tankers. The country also raised its December output by around 30,000 bpd. Iraq’s December output also rose and while the country insists it will stick to its reduction commitments, in force from this month, there are suspicions it may funnel oil through Iran to circumvent the agreed OPEC quota. Newly rising production in Libya is another worry impacting oil prices. While prices are still expected to rise in the first half of 2017, there is plenty of debate and doubt as to by how much is realistic, with competitors that have not agreed to output caps looking to exploit higher prices.

Brent crude futures had dipped 0.7% from their previous close early this morning and were trading at $56.7 a barrel at 07:45 GMT. WTI futures were down 0.74% to $53.

Meanwhile, gold prices have registered some Monday gains after slipping back on Friday on the prospect of accelerated interest rate hikes in the U.S. Spot gold price is up almost 5% since December lows reached following the vote for Donald Trump as president-elect, almost 2% gained last week despite Friday’s hit. Most analysts believe the major surge for gold has now come to an end and further gains, or a new retreat, will be mainly dictated by the pace of interest rate rises over the coming months. Early this morning spot gold had added 0.1% to $1,174.23 oz, with a similar 0.1% gain for gold futures to $1,174.10 oz.

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