Croft said Middle Eastern producers were expecting to see prices bounce back by now.
"They did not expect we'd be in this price environment with U.S.
production slowing," she said. "The Saudis are taking on austerity
measures to try and endure lower for longer."
Saudi
Arabia is bracing for the "lower for longer" environment in its 2016
budget, released by the kingdom's Ministry of Finance last week. The
country is fighting record deficits and introducing reforms to ride out
the low-price environment. OPEC shows no sign of a slowdown in production overseas. But Croft said dialogue surrounding the issue might be overblown.
"I don't think there
are a million additional barrels out of OPEC," Croft said. "I think the
Iranians can maybe do 375,000 to 500,000, but I don't think OPEC is
going to produce the type of gains we saw last year."
The question now is, how low will oil go? Goldman Sachs predicted as
low as $20 a barrel in September, which Croft said is a possible bottom,
but not likely.
"I
think we could certainly in a bad macro headline crash through 30 into
the 20s," Croft said, referring to Goldman's prediction.
But given that U.S. production is coming down, and demand has not gone over the cliff yet, Croft said, "I don't think so."
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