Bharat Petroleum Corp (BPCL) chairman and managing director Arun Kumar Singh has said soaring oil prices are likely to drop to $90 per barrel in two months, as worries of an impending global recession grip the commodity market, which would adversely impact global demand at a time when supply from Russia is unlikely to fall.
In an interview with ET, Singh said: “Prices can touch $90 in two months if the US continues with inflation and low growth and China is unable to find fixes for its economic troubles. Economic woes in these two countries can affect demand.”
However, the oil demand may get some boost as natural-gas prices shot to record highs, pricing out many customers. “Oil demand could get a small leg up from gas-to-oil switching by consumers unwilling to pay extremely high prices for natural gas across the world,” the financial daily quoted the BPCL as saying.
Brent, the international benchmark, futures were down $1.34, or 1.3 per cent, at $99.20 a barrel on Wednesday, down nearly $10 since last week, as economists have raised the probability of economic downturn for major economies, and markets weigh OPEC+ decision, expected Wednesday, on September output. Moscow has a major say in OPEC+ policy decision.
Singh was confident that Russia would not lower its production anytime soon and, therefore, the overall global oil supply will remain unhampered in the coming months.
Further, Europe is leaving no stone unturned to find alternatives to Russian oil and exploring options in the Middle East and the US for that.
Singh explained, “If Europe shifts away from Russia and gets increased volumes from the Middle East, more Russian supplies will be available to the rest of the world. This could increase the share of Russian oil in the Indian or Chinese markets over the coming months.”
Initial apprehensions after Russia’s invasion of Ukraine were that a major share of Russian exports would go off the market hasn’t come true. Europe remains dependent on Russia while India and Beijing have also boosted their intake of Russian oil.
In March, the Ukraine war and the consequent curbs on Russia had sent oil prices as high as $139.
