According to Goldman Sachs, oil prices will fall to the ‘unreal’ level of $20 a barrel in 2016 because of the oil glut. One of the main reasons of the sharp decline in the oil price will be Iran entering the global market. Because of Iran, OPEC’s daily production will increase to 32 billion barrels a day and more.
Analysts at Goldman point out that oil prices will continue falling down as OPEC doesn’t have a single viewpoint. OPEC’s meeting has confirmed their opinion that OPEC isn’t interested in balancing the market.
In addition, Goldman thinks that as soon as the price falls to $20 per barrel, shale producers will leave the market; the number of rigs in the US will start falling, while companies will reduce their exploration expenditure.