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Brent oil prices may rise even more on news from Saudi Arabia, experts forecast

The situation in Saudi Arabia, however, is not the only cause of the oil price hike

MOSCOW, November 7. /TASS/. Brent oil prices may reach the level of $70 per barrel against the situation in Saudi Arabia but fundamental factors support a correction to $60 per barrel and lower, experts say.

The oil price hike to the all-time high values since summer 2015 is just partly related to anti-corruption arrests in Saudi Arabia, analysts say. The news background is generally favorable for oil prices and Brent oil prices may be above $70 per barrel for a short time, experts say. Nevertheless, oil prices will then go down to $60 per Brent barrel and lower, they believe.

"Oil prices are fueled by domestic political developments in Saudi Arabia, which may probably agitate the market for several weeks more. Dramatic price spikes for raw hydrocarbons are possible during that time. The price may even reach $70 per barrel in case of troubles with supplies from Saudi Arabia, although there are no signs of situation development under the worst case scenario so far," department head from Freedom Finance Georgy Vaschenko says.

Nevertheless, the situation in Saudi Arabia is not the only cause of the oil price hike, says Vladimir Bragin, financial markets and macroeconomy analysis director with Alfa-Capital.

"Developments in Saudi Arabia, the situation with Lebanon and fired missile, US rig count decline data and sovereign debt default in Venezuela, another major oil exporter - the whole news flow simply supports the oil price growth. Certainly, the situation in Saudi Arabia most probably exerted significant influence. Nevertheless, the whole range of developments simply contributed to the oil price hike also," Bragin said.

At the same time, fundamental factors favor a correctional price drop, experts believe. "From my point of view, short-term psychological factors do not always influence on the long-term oil dynamics. The demand and offer rebalanced but the demand will grow in any away against the oil price growth. Production in the United States is growing despite the declined rig count. Other countries will also probably invest into the oil sector. Short-term risks are currently included into the price and if they go away, oil prices will undergo correction, from my point of view," Bragin added.

Correction may return oil prices to the level below $60 per barrel, says Igor Yushkov, an expert from the National Energy Security Found. "I think there will be a rebound [in oil prices - TASS], probably to the level below $60 per barrel for some period. The long-term trend is that the oil price corridor is growing on a going basis. It was $40-45 per barrel, then $50-55 [per barrel], $55-60 [per barrel], and the price is now above $60 per barrel. I think this corridor will continue growing," Yushkov said.