What is the outlook for oil prices?

Oil prices will be set by the face-off between Saudi Arabia and US shale producers. Could tail risks change the possible outcome?

North Sea Oil and Gas
(Image credit: Getty Images)

Two decades ago, I was covering energy when oil moved above the $20-$30 a barrel range, where it had trodden water for years, and headed above $40. At the time, few analysts thought it would stay there and I don’t remember any believing it could top $50. As we now know, oil kept rising – with some volatility – to trade consistently in the $90-$110 range from 2011 to 2014. 

In hindsight, nobody fully predicted the impact of rising demand in emerging markets, especially China, where it went from 4.6 million barrels a day (mb/d) in 2000 to 9.3mb/d by 2010. An oversight like that should make us wary about predicting too confidently what recent events – from Saudi Arabia saying it will raise output and drop its $100 target price, to the risk of war in the Middle East – will mean. Still, the history of the oil price may give us a few clues about what to watch.

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Cris Sholto Heaton

Cris Sholto Heaton is an investment analyst and writer who has been contributing to MoneyWeek since 2006 and was managing editor of the magazine between 2016 and 2018. He is especially interested in international investing, believing many investors still focus too much on their home markets and that it pays to take advantage of all the opportunities the world offers. He often writes about Asian equities, international income and global asset allocation.

Cris began his career in financial services consultancy at PwC and Lane Clark & Peacock, before an abrupt change of direction into oil, gas and energy at Petroleum Economist and Platts and subsequently into investment research and writing. In addition to his articles for MoneyWeek, he also works with a number of asset managers, consultancies and financial information providers.

He holds the Chartered Financial Analyst designation and the Investment Management Certificate, as well as degrees in finance and mathematics. He has also studied acting, film-making and photography, and strongly suspects that an awareness of what makes a compelling story is just as important for understanding markets as any amount of qualifications.