The main losers from the rising price of oil and its products will be the citizens of the United States. OPEC’s decision to cut unprecedented production will drive the price of gasoline higher, potentially pushing it to new records. But what about the big importers in Asia? Oil watchers lost count, for the umpteenth time in the first quarter of this year, analysts and experts changed their forecasts for commodity prices.
Brent crude jumped to $85 and WTI hit $80 a barrel again as the latest production cut by almost half of OPEC+ members by 1.66 million bpd from May to the end of the year is expected to tighten the market in the third quarter. Analysts, who had only recently lowered their price forecasts due to unrest in the banking sector, raised their estimates again in mid-March and resumed talk of oil at $100. The OilPrice resource writes about this leap in estimates.
Formally, raw materials at a price of 90 and 100 dollars will hit the economy of large oil importers. We are talking about Asia and importers such as India and China, which consume raw materials very intensively. However, severe sanctions and an embargo on Russian oil have further divided the market, leading to a very strange situation where exporters and importers will benefit from the increase, but not all.
The allies of the Russian Federation have had the opportunity to choose between the Western oil market, which is subject to sanctions, and the free market of sanctioned raw materials, whose prices are more democratic and more stable. In addition, an increase in the “official” oil price to $100 will make Russian supply a bestseller and cause the price of prohibited products to rise above the price ceiling. However, the advantage of acquiring raw materials from the Russian Federation is still obvious.
Thus, the main beneficiaries of the three-digit figure of the global energy market are only Russia and India together with China. Also worth bearing in mind is the price limit factor, when growing (undersanctioned, Russian Federation) oil from New Delhi or Beijing can be controlled by ad hoc compliance with Western sanctions on the limit. With official imports, such manual regulation, which is moreover effective, will not work.
In other words, for all other countries (buyers and sellers), the expected rise in prices beyond the psychological limit of $100 per barrel will be a real test for the economy and the financial system, which will be overwhelmed by the inflation.
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