Oil prices are expected to continue to decline despite ongoing geopolitical concerns over the pressing Islamic insurgency in Iraq and warring militia's in Libya.
Brent Crude, a London-traded global benchmark for oil prices, traded at $102.69 a barrel at midday trade on Monday, up from August 19's 14-month low of $101.07 a barrel. On June 19, Brent traded at $113.71 a barrel. Experts expect prices are now heading to $100 a barrel.
"I see prices continuing to slip," said Robin Mills, head of consulting at Manaar Energy in Dubai, in a phone interview.
But over the next 12 to 18 months, experts say Brent prices could slide further with United States shale oil production expected to continue to be strong and recent data showing little economic improvement in China.
Mills said he sees the Brent price falling to $90 a barrel, while Luay Al Khatteeb, a visiting fellow at the Brookings Doha Centre, said in a phone interview he did not see prices going below $95 a barrel.
"Longer term there will be some downward pressure on oil prices because of that US supply," said Gary Dugan, Chief Investment Officer at the National Bank of Abu Dhabi (NBAD), in a phone interview.
The International Energy Agency (IEA) said in its oil market report this month, "Despite armed conflict in Libya, Iraq and Ukraine, the oil market today looks better supplied than expected."
Violence in the two oil producing states has yet to see a spike in global oil prices with Iraq's southern corridor, where the majority of Iraq's oil is exported, still safe and under the control of Baghdad. The Kurdistan Regional Government (KRG) forces have also held onto its oilfields despite the threat from Isil (The Islamic State of Iraq and the Levant) fighters, which control large swathes of Northern Iraq.
"I don't think there will be an immediate interruption in production in Iraq," Mills said.
Experts say Libya is a wild card with no clear winner among the warring militia's fighting for control of the oil rich state. So far its ports have remained open and oil exports continue to flow.
Historically, oil prices have spiked in response to conflict in the Middle East. But the rapid advancement of Islamic insurgents in Iraq and subsequent bombing by the United States did not spur such a reaction.
Al Khatteeb said he expects — in the immediate term — prices to plateau once they hit $100 a barrel.
Oil producing giant Saudi Arabia and other members of the Organisation of Petroleum Exporting Countries (Opec) are likely to stem production to maintain a $100 a barrel pricing, he said.
"I think that Opec would be sensitive if the price of Brent went below $100 a barrel," he said in a phone interview.
Dugan said he would be surprised if the Brent Crude price does fall fell below $100 a barrel.
He said he sees prices starting to rebound off $102 a barrel and topping off at $108 a barrel but in response to positive economic news such as a clear signal that the European Central Bank will move to adopt quantitative easing.