Oil prices are expected to remain high due to the nature of the supply issues the industry faces. Despite OPEC’s oil output rising to 30.89 million barrels per day, the highest in more than three years according to the International Energy Association, an array of geopolitical events are keeping prices high.
Caroline Bain, Commodities Industry Analyst at the Economist Intelligence Unit said: “After being close to balance in 2011, the oil market is expected to move into surplus this year owing to an improvement on the supply front. Growth in consumption will be constrained by the weak European economy which in turn will lead to weaker export market growth in the developing world.
The events of the Arab Spring last year isn’t the only reason for high prices, as 2012 brings new challenges to the oil industry.
Ms Bain added: “Prices are expected to remain relatively high this year given the extent, and possible severity, of geopolitical risks hanging over the market. It is not only the sabre-rattling between Iran and the West that is sending jitters through the oil market; other geopolitical tensions such as the civil unrest in Nigeria, the risk of heightened security concerns in Iraq, the risk of disruptions to oil supply from Sudan are all putting a floor under prices.”