Oil prices could reach $80 a barrel in April, although such a price would not be justified by market fundamentals, Russia's Energy Minister Alexander Novak said on Friday.
Asked whether $80 oil is a fair price for oil, Novak told reporters at the end of an OPEC/non-OPEC ministerial meeting in Saudi Arabia that he couldn't rule out anything, and geopolitical factors could push prices up. But $80 oil, according to Novak, is not the price that fundamentals are currently supporting, Russian news agency RIA Novosti quoted the minister as saying.
Novak declined to pinpoint a specific price of oil that would be justified by fundamentals, saying that oil prices are volatile right now. When oil prices are more stable, then we would be able to say what the fair price of oil is, the minister said.
Oil prices fell on Friday morning after U.S. President Donald Trump criticized OPEC in a tweet, saying that "Oil prices are artificially Very High! No good and will not be accepted!"
Asked by reporters if he thinks that the price of oil is artificially high, Novak said "No".
Reports over the past week have emerged that OPEC's biggest exporter and de facto leader Saudi Arabia could be aiming for oil prices at $80 and even $100 a barrel to balance its budget and boost the valuation of its oil giant Aramco.
Related: How High Can Trump Push Oil Prices?
Some analysts do expect oil to reach $80 in the coming months.
Francisco Blanch, head of global commodities research at Bank of America Merrill Lynch, told Bloomberg Daybreak: Americas that he sees oil hitting that level in this quarter, due to some bottlenecks emerging in the Permian that could slow down the growth pace.
Goldman Sachs, for its part, sees oil prices at $80 by the fourth quarter of this year due to expectations that global oil demand growth will stay high this year, and that China's demand growth may be even higher than currently estimated.
By Tsvetana Paraskova for Oilprice.com
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Comments
Judged by the above criteria, an oil price of $80 a barrel can be justified. In fact, a fair price for oil ranges from $100-$130 unless global oil market fundamentals tell us otherwise. Such a price is good for the global economy in that it stimulates global investments, enables oil-producing countries to expand their production capacity to meet global demand and also enables the global oil industry to balance its books.
Neither the Russian oil minister nor anybody else for that matter can specifically tell what oil price can be justified by market fundamentals. Only the fundamentals themselves can tell and believe me they will not be shy in making their verdict loud and clear.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London