How Oil Prices Could Hit $65

Oil Prices

If the world suffers a recession that would crush fuel demand, oil prices may fall to $65 per barrel by the end of this year and to as low as $45 per barrel by the end of 2023, according to Citigroup.

The bank stated in a report on Tuesday, reported by Bloomberg, that the forecast’s underlying assumptions include a worldwide recession, a lack of supply-side intervention from OPEC+ or some of its members, and a decline in oil investments.

“For oil, the historical evidence suggests that oil demand goes negative only in the worst global recessions,” Citi analysts including Ed Morse and Francesco Martoccia wrote in the note. “But oil prices fall in all recessions to roughly the marginal cost,” the bank says, as carried by Bloomberg.

The market started to worry about the aggressive interest rate hikes from central banks, including the Fed, as they try to tame the steepest rise in consumer prices in developed economies in four decades. As a result, oil prices have fallen in recent weeks due to fears of a recession, and they saw their first monthly decline in eight months in June.

Read: SBP may hike policy rate by 125 bps to tame record inflation

Ed Morse, the head of commodity research for Citi, has been pessimistic about oil for months. In June, he claimed that crude oil is significantly overpriced and should be in the $70s region.

Oil drops by $10/barrel

On Tuesday, oil prices slumped by about $10 per barrel on concerns of a looming global recession curtailing demand, even with expected supply disruptions as oil and gas workers in Norway began to strike.

Oil Prices
Previous articleAnchorperson Imran Riaz Khan arrested by Punjab police
Next articleJake Paul to face Hasim Rahman Jr. instead of Fury