Moody’s Investors Service Inc. has lowered its oil price assumptions for 2015 adding that it doesn’t expect supply/demand equilibrium until 2020.

The New York-based credit-rating agency has lowered its price assumption for Brent crude oil, the international benchmark, to US$55 a barrel from US$60 a barrel amid increases in oil production and weak demand. In addition, Moody’s has also cut its assumption for West Texas Intermediate crude, the North American benchmark, to US$50 a barrel from US$55 a barrel.

“We expect prices to rise only gradually in 2016, but not enough to keep pace with rapidly expanding production,” says Steve Wood, managing director of corporate finance with Moody’s. “In addition, there is the risk that the recent deal between international parties and Iran could lead to an increase in the country’s exports, which would further weigh on prices.”

Although Moody’s still expects that supply/demand equilibrium will eventually be reached at around US$75 a barrel for Brent crude, the firm now expects this price won’t be reached until the end of the decade. That price, Moody’s says, “would support development of the world’s most expensive oil in an environment of lower development costs than in recent years.”

Nevertheless, Moody’s has maintained its price assumptions for North American natural gas, “reflecting continued strong natural gas production and demand from electrical generation.”