World Bank on Thursday raised its forecast for the oil price in 2017, as the members of the Organization of the Petroleum Exporting Countries (OPEC) prepare to limit their production.
In its latest quarterly Commodities Markets Outlook report, the Washington-based lender forecast the crude oil prices in 2017 to reach 55 U.S. dollars per barrel, up its forecast of 53 dollars in July.
“We expect a solid rise in energy prices, led by oil, next year,” said John Baffes, lead author of the report. He added that the forecast was under “considerable uncertainty”, as the market expected the details and implementation of the OPEC agreement.
The report said OPEC’s ability to affect oil prices is likely to be tested by the expansion of oil supply from unconventional sources, including the U.S. shale oil industry.
The OPEC announced in late September its intention to reduce its oil output to 32.5 million bpd from the current level of some 33.24 million bpd, but details are to be worked out when members meet again in November.
According to the report, energy prices, which include oil, natural gas and coal, are projected to jump almost 25 percent overall next year; metals and minerals prices are expected to rise 4.1 percent next year, and agricultural prices are expected to grow 1.4 percent in 2017.
“Low commodity prices hit commodity exporting emerging and developing economies hard but now appear to have bottomed out,” said Ayhan Kose, director of the World Bank’s development prospects group.