WASHINGTON (Sputnik) — Oil oversupply in global markets will keep the commodity prices significantly below $100 a barrel in the medium term, International Monetary Fund (IMF) Managing Director Christine Lagarde said on Wednesday in a speech to the Nigerian National Assembly.
"Over the medium term, oil prices are likely to remain much lower than the 2010-13 average of more than $100 a barrel," Lagarde stated. "Why? Because of the huge oversupply in global oil markets."
Lagarde explained that the shale oil boom in the United States, along with the return of Iraq and Iran to the market have impacted the situation. She added that emerging economies have dropped their demand for oil at the same time.
On Monday, US Moody’s said the global oil and gas industry will have to reduce spending in 2016 in the face of dropping oil prices. The rating agency also suggested that the sector will see a rise in defaults.
Lagarde noted that the global economic outlook has weakened, and only a modest recovery is expected in 2016.