REUTERS
Oil prices fell by more than 3% on Thursday as officials from the big global powers wound up nuclear talks with Iran, and with analysts from Goldman Sachs predicting that oil prices may fall to $40 per barrel this summer.
The Head of European Energy Research at Goldman Sachs, Michele Della Vigna, said non-OPEC oil producers had created oversupply in the market, which has pushed down prices.
However, OPEC’s reluctance to cut its output at its last meeting in November has also undermined prices for the commodity.
Vigna said the near-term risk is that the price may fall to $40 a barrel during the summer months.
He also added that a “super spike” to above $100 a barrel was unlikely, but that $25 a barrel for oil was also not a likely scenario.
"I think the market has realized that where we need to find the adjustment is onshore U.S. [production], and that is where the market is focused,” Vigna told CNBC.
"Clearly an OPEC cut would help getting to equilibrium faster, but at the end of the day, it is non-OPEC that needs to sort out the oversupply that it has created,” he added.
As for OPEC, Vigna says the oil cartel OPEC will further be reluctant to cut its output in the run-up to the next meeting in June.
Last summer, oil prices fell by more than half, closing to the level of $45 per barrel for Brent crude at the beginning of this year.
OPEC's decision to maintain its oil production quotas at 30 million barrels per day encouraged the price plunge.
Meanwhile, the positive resolution the Iran nuclear problem is seen as a negative development for the global oil market, as the lifting of sanctions against Iran could see the country export oil into an already oversupplied market.