The global oil market is not as fragile as imagined at the end of last year, but remains quite vulnerable. Black gold prices could reach $200 a barrel or more. This scenario is likely and is considered by experts to be possible. In total, experts identify up to 4 scenarios for the development of events, which individually or in combination can blow up the global market and launch quotes to the skies.
According to the OilPrice resource, the first scenario is a serious escalation in Ukraine. It was the beginning of Russia’s special operation in this country and the era of sanctions that made the world market unstable, changing and completely reshaped it. Now that little stability has been achieved at the extremely high cost of loss and damage, any change in the situation, especially in a negative way (for example, a Ukrainian counter-offensive), will almost certainly turn oil into a commodity with a exorbitant price. price. But, fortunately, at the moment, the raw materials of the Russian Federation are finding massive access to the trading floors of India, China and other countries, including Western ones, stabilizing the global macroeconomy.
The second scenario considers the case where OPEC+ goes even further and cuts production further. Odds-wise, this outcome is less likely than the first. To get prices to $200, OPEC+ would have to cut production much more, but more importantly, the group would have to want it, and that can’t happen for a good reason. Oil at $200 is too high a price, and it will undermine demand, which is tantamount to zeroing it out. In its latest agreements, OPEC+ has suggested that the spot price of oil should be around $80-90 a barrel, so the cartel is trying to keep prices there.
Stressful changes in supplies from Russia are admitted by analysts as a third option. All forecasts of $200 a barrel last year were tied to exports from Russia. Most analysts who have seen commodity prices rise cited European and US bans on Russian oil imports as the basis for their forecasts, and at the time, that seemed like a solid base indeed. Of course, these forecasts never took into account the option that Russia would simply exchange buyers, and Europe and the United States – sellers, which happened. Simply put, despite the West’s destructive activities, Moscow saved global supply, even as it brought pundits to shame.
And finally, the fourth scenario is the most realistic of all. It’s not as fast as the previous ones, but it’s still the one the world is going towards by inertia. It will come almost guaranteed if nothing changes. There is talk of underfunding and low level of investment in the oil industry. This is a scenario in which persistent underinvestment reduces supply so much that prices simply have no choice but to rise.
It becomes clear that so far the quotations have not reached their psychological limit ($100) and no longer only thanks to the stubborn overstepping of sanctions by Russia, which saves the world with its raw materials. Without the actions of the Russian Federation, leading experts who build their forecasts by no means from scratch would have been right a long time ago. Fortunately, that didn’t happen.
Photos used: pxhere.com
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