Citigroup has warned that crude oil could fall to $65 a barrel by the end of this year and $45 by the end of 2023 if demand stagnates, according to Bloomberg.
U.S. bank analysts said in a report released today, Tuesday, that these expectations are based on the absence of any intervention from OPEC+ producers and a decline in oil investment.
Citigroup’s forecasts compare the current state of the energy market to the crises of the 1970s, while the bank’s economists do not expect the US to plunge into recession now.
“For oil, historical data show that oil demand only turns negative during the worst periods of a global recession… But oil prices fall in all recessions almost to marginal cost,” the report says.
Brent oil prices tumbled on Tuesday, cutting $1 off earlier gains as fears that a possible global recession will cap fuel demand outweighed fears of supply disruptions, including a possible cut in production in Norway.
Brent crude futures fell 60 cents, or 0.5%, to $112.89 a barrel by 0638 GMT.
Contracts for West Texas Intermediate crude jumped $1.13, or 1.1 percent, to $109.58 a barrel from Friday’s close.
Investors are increasingly concerned about demand amid tightening global financial conditions as the US Federal Reserve fights inflation by rapidly raising interest rates.
Source: Bloomberg + Arabic CNBC.