Fesharaki, an expert in the energy market and an academic warned that the world may witness a drastic fall in price of a barrel of Oil to $30 if the OPEC failed to cut production.
As per the expert, there is too much oil on the market and the US pumps more oil than before. Also countries like Libya and Nigeria produces more oil.
The demand is robust but it is also expected that there is a serious likelihood that prices will sink next year to $30-$35 a barrel and will stay there for a while.
Late last month, OPEC said it would extend an 1.8 million-barrel-a-day cut to oil output by nine months, though March 2018, after the November deal failed to fully clear a global oversupply in oil, which has been keeping prices relatively low. Some non-OPEC producers have also signed on to the deal.
Qatar crisis will have a very little impact on global oil prices as the country is not a major producer of Oil. Several Saudi-led Arab states abruptly cut off ties to tiny Qatar earlier this month. The reason for the rift was an alleged statement by Qatar’s emir that criticized Saudi Arabia and President Donald Trump, who recently visited Saudi Arabia in his first foreign trip, agreeing to new military contracts and a broader economic relationship.
Low oil price will lead to rippling effect in the global market. Last time the price of oil fell, the stock markets fell with it. It is widely believed that a drop in the price of oil is like an earthquake or a tsunami which will bring destruction it its path.