How long will oil prices stay low?

With the world wondering how long Saudi Arabia will allow oil prices to stay at their current levels, the country’s oil minister released in a statement that ‘only Allah knows’, which was perhaps not the news the world was waiting for. The statement was made in an attempt to fend off criticism that Saudi Arabia are keeping oil prices low on purpose.

The low oil prices have slowed the US shale boom, which some experts suggest was a deliberate move by the Saudi’s. The price to extract shale oil is a lot higher than that of conventional methods used by the Saudi’s, therefore making it unprofitable to extract shale oil in some areas of the US.

Prices have recently recovered slightly due to tensions in the Middle East, cutting some supply to the market. However, analysts expect Iranian oil to come back into the market with talks between the Iranians and US progressing well, a move which would push the price lower.

The low oil price has given the Saudi’s the motivation to diversify their economy, with huge investment expected in the coming years in areas such as mining, education and human capital development.