Fitch Ratings, one of the “big three credit rating agencies” in the US, sees oil prices averaging $65 per barrel towards the end of 2019 and into 2020, around the time the South American country of Guyana is expected to begin producing oil.
Fitch Ratings’ Senior Director, Dmitry Marinchenko, told Reuters in an interview published on Friday that a faltering global economy may start eating into demand for oil as early as this year, pushing prices lower. This is against the backdrop of Brent crude currently trading at around $70 per barrel, it highest so far for the year.
The rating agency expects global economic growth to slow to 2.8 percent in 2019-2020 from 3.2 percent in 2018. It sees 2019 oil prices averaging around $65 per barrel, falling to $62.50 in 2020 and $57.50 by 2022. This remains above $40 per barrel, which analysts have said is around the breakeven for the ExxonMobil-led consortium operating in Guyana.
“If the global growth slowdown becomes more pronounced, or even if recession materialises, then demand for oil could fall sharply, which is the main risk for global oil prices,” Marinchenko told Bloomberg.
ExxonMobil has found more than 5.5 billion barrels of recoverable oil in Guyana. The company, in partnership with Hess and CNOOC, will begin producing oil from the Liza field by 2020 with multiple developments expected to follow which could see as much as five FPSOs operating in the Stabroek Block by 2025.
John Hess, Chief Executive Officer of Hess Corporation, has said the oil found so far offshore Guyana is uniquely advantaged by its scale, reservoir quality, cost, rapid cash paybacks and superior financial returns.