Global crude oil prices are forecast to recover to $55 per barrel in the next 12 months, according to a global brokerage firm.
The expected rebound from an 11-year low is likely to be helped by gains in oil prices in the later half of 2016, according to a research report by UBS Wealth Management's Chief Investment Office (CIO).
However, oil prices are likely to remain under pressure in the short-term, as they are yet to see a bottom in the current downtrend, Press Trust India reports, citing the study.
The oversupply situation persists in the oil market, following a 2.7 percent increase in supply last year. The current supply glut needs "accelerated" output cuts to rebalance the oil markets, the report said.
Concerns over excess supply remain due to a possibility of an increase in global supply from Iranian oil exports following the lifting of sanctions on the country.
Oil prices could fall below $25 a barrel in the short term if the imminent oil supply from Iran is not checked with rapid output reductions, the report said.
"Low Brent crude prices remain an immediate challenge for oil exporting nations in the Middle-East and North Africa, and in particular for government budgets. The price recovery we see in the second half of 2016 should support the region in the near term, but economic reforms will still likely have to be implemented as oil prices are unlikely to move back to triple digit levels anytime soon," said Simon Smiles, chief investment officer for Ultra High Net Worth individuals at UBS Wealth Management.