Oil prices will back away from $80 a barrel over the next six months as Saudi Arabia and its allies add more supplies to the market. Saudi Arabia — along with Russia, Kuwait and the United Arab Emirates — has vowed to meet global oil demand as U.S. sanctions cut off Iranian exports later this year and Venezuela's output continues to decline.
Brent crude has traded between about $77 and $79.50 this month, but Barclays forecasts it will average $73 a barrel in the second half of 2018.
Morgan Stanley recently raised its six-month outlook for Brent to $85 a barrel after the Trump administration took a more hawkish stance on cutting off Iran's oil exports. Goldman Sachs warned last month that prices could overshoot its call that Brent will peak at $82.50 this summer.
OPEC, Russia and several other producers recently agreed to increase output by 1 million barrels in order to ease oil prices.
Governments around the world could also tap their strategic oil reserves, Barclays said. While oil stockpiles held by companies have fallen to their five-year average at 2.8 billion barrels, governments in developed countries keep another 1.8 billion barrels in reserve for emergencies.
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