According to Citi bank, oil prices could rise to $100 per barrel in the short term due to recent events in Saudi Arabia and Russia. The firm revised its oil balance projections for the third and fourth quarters on Monday, following the extension of oil production cuts by both countries until the end of the year. This led to crude oil prices in the United States exceeding $90 per barrel for the first time since November 2022.
Edward Morse, Citi’s global head of commodities, said geopolitical factors and Saudi Arabia’s desire to retain oil in the market, along with Russia’s export constraints, point to higher prices in the near term. However, he also warned that higher prices in the short term could lead to disadvantages next year and that the current price level of $90 appears unsustainable due to faster growth in supply than demand.
Last week, OPEC forecast strong demand and warned of a supply shortfall in 2023 if production cuts continue. Citi, in reviewing its fourth-quarter balance sheets, adjusted its demand outlook downward, citing global risks and uncertainties in China. Morse highlighted Chinese exports of refined products as an unpredictable variable, stating that an increase in export quotas could lead to greater refinery activity and more exports. This could ease tight diesel markets, but potentially collapse gasoline markets.
In August, inflation, as measured by the Consumer Price Index, saw its largest monthly increase this year, rising 5.6%. This increase included a 10.6% increase in gasoline prices.
It is important to monitor how these developments in Saudi Arabia, Russia and China will impact global oil prices in the short and long term.
– CNBC, Michael Bloom and Yun Li contributed information to this article.