According to the Chinese analysts, the oil prices will stay around 60 dollars per barrel for the next five years. These predictions are owed to the theory that China’s economy is cooling down after transitioning from a 15 year super cycle to build up a massive industrial machine. Now the economy needs to adjust and accommodate the over investments. Xie stated that the oil prices declined to dollar 60 per barrel in September, as China’s energy demand tapered off. He said that coal is 60%, which made him suspect that oil will come to 60% too. Xie also stated that China’s demand will be low and it will experience deflation, but its economy will function normally and consumption will remain healthy.
Xie predicted that China’s raw material providers, Australia, Japan and Germany will suffer as a result, but consumer product providers France and Switzerland will be less affected. Richard Malinson from energy aspects however contradicted Xie’s claims, stating that the low price of oil will increase demand. The low price will be an additional benefit for the other economies which will increase the demand. He said that the prices won’t be able to balance at dollar 60 per barrel, as many OPEC supplies won’t be feasible at that level. This will result in fewer projects online and less supply, thus offsetting the decline in the prices. He said that China’s economy won’t be the centre of demand growth anymore as it is re-balancing.
The United States companies will also benefit from the oil price decline, as each dollar ten drop in the cost of crude oil will add 2 to 3/10ths of a percentage point to the GDP. The United States expects the oil prices to sustain at dollar 65 to 75 for the next 12 months.