The price of oil is likely to go up. According to oil analysts at S&P Global, geopolitical developments are likely to drive up prices, and supply and demand issues are also a factor. Another oil analyst, Yaw Yan Chong of Refinitiv Oil Research in Asia, attributes the projected price increase to Europe’s soaring gas prices and Saudi Arabia’s recent decision to cut production.
On the other hand, the US Federal Reserve is expected to continue raising interest rates, and it is likely to continue pushing its weight around in an effort to keep the price of oil high. However, the oil price forecast for the coming week is less bullish than that for the next decade, when global demand should rebound from the global recession.
The political uncertainty in the Middle East is a concern for the oil market. JPMorgan Chase has warned that a break in Russian oil exports could push Brent futures to a “stratospheric” $380 a barrel by year’s end.
Despite the uncertainty, the price of oil has returned to pre-recession levels. Moreover, demand growth will continue in the emerging and developing economies. Rising incomes and populations are expected to fuel growth in Asia. In addition, the petrochemical industry remains a key driver of growth. LPG, naphtha and ethane are estimated to account for 70% of the increase in oil product demand over the next decade.
Oil exporting countries are highly vulnerable to market volatility. These countries make up over 60% of world merchandise exports and are heavily dependent on oil prices for their survival. While some countries may be able to weather the current crisis on sovereign wealth funds and low public debt levels, many are resource-dependent and rely on oil revenue for macroeconomic stability.
While OPEC’s Price War is only a short-term risk to the oil price, it can have long-term ramifications. The increased production in Venezuela, Libya and Iran will have an impact on the oil price. If OPEC fails to cut output in these countries, the price could rise substantially. If this occurs, prices could reach $100 a barrel.
Although moderate oil prices are likely to persist for the time being, this is not always an easy task. Hurricanes and supply disruptions can disrupt oil production and cause prices to rise or fall. And with oil prices at a high, the price of gasoline could rise soon.
OPEC and U.S. government officials are ready to cut oil output at any time. In addition, European countries are facing disruptions in their energy supplies due to the war in Ukraine. Regardless of the price of oil, it’s still important to remember that the price of gasoline is more than the price of crude.
The United States is a major producer of crude oil. And the dollar has benefited from its recent decline. The energy sector contributes a significant percentage to the country’s GDP, and the U.S. is now the largest producer of crude oil in the world. The price of crude oil will also negatively impact countries that depend heavily on exporting it.