The Petroleum could collapse to $65 per barrel towards the end of this 2022 and fall to $45 by the end of 2023, if a recession occurs that stops demand, he warned Citigroup.
(See: The 7 projects that could request an environmental license for ‘fracking’).
This perspective is based on the absence of any intervention on the part of the producers of the Organization of Petroleum Exporting Countries and its allies (Opec+) and a decline in oil investments, analysts Francesco Martoccia and Ed Morse said in a report.
Oil has soared this year following the Ukraine invasion and banks are now trying to determine their course for 2023, as central banks raise interest rates and recession risks increase.
(See: Sakhalin-2: the giant oil and gas project controlled by Russia).
Citi’s perspective compared today’s energy market to the crises of the 1970s.
Of course, for now, the bank’s economists they do not expect the United States to fall into a recession.
(See: Synthetic oil: what it is and how it would combat climate change).
“For oil, historical evidence suggests that oil demand turns negative only in the worst global recessions.Citi analysts said.
“But oil prices fall in every recession to about their marginal cost.“, they added.
(See: ‘We have to continue exporting oil’: Ocampo, minHacienda de Petro).
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