US bank forecasts further oil price spike

Dar es Salaam. Price of oil might continue to rise in future, after the US bank forecast showing the world oil prices will remain high during this second half of this year, despite increased crude productions.

For Tanzania, the Energy and Water Utilities Regulatory Authority (Ewura) has announced an increased fuel prices for July this year, citing the increase in the world price.

The US based Morgan Stanley has been quoted saying the fuel price might hike to $85 this year as Trump targets Iranian barrels.

Morgan Stanley raised its forecast for Brent crude prices by $7.50 to $85 a barrel for the second half of 2018. The bank expects the oil market to be undersupplied as tougher-than-anticipated U.S. sanctions cut off Iran’s crude exports and output in Libya and Angola falls more than expected.

Production increases from Saudi Arabia, Russia, the UAE and Kuwait will not be enough to balance the market, Morgan Stanley says.

Many OPEC members are already crying foul, accusing Saudi Arabia of doing Trump’s bidding.

Officials from the Organization of the Petroleum Exporting Countries, and other major oil producers like Russia pledged last month to increase total output by around 1 percent of the global oil supply.

Venezuela, once a major producer, has nearly halved output, to less than 1.4 million barrels a day, as its economy has cratered and international sanctions have been imposed on the country.

“Oil prices will rise more than previously expected in the second half of 2018, as the Trump administration aims to wipe out Iranian crude exports by November,” says Morgan Stanley forecast.