Jeremy Weir, chief executive of Trafigura, one of the world’s largest commodities traders, sounded the alarm on global economic turmoil.
Weir told the FT global board meeting: “We’re deep in a critical situation and I really think there’s going to be a problem in the next six months, and once you get to these parabolic states, the market will change and it will probably surge quite a lot. ” He means that after the Russian-Ukrainian war has caused volatility in the energy market to rise sharply, the global economy may also be turbulent.
JPMorgan Chase Chief Executive Jamie Dimon last week warned of an approaching “economic hurricane”. “The war has unintended consequences, which happens to happen in the global commodity markets for wheat, oil, gas, and similar commodities, and in my opinion, this will continue. We have not acted appropriately to protect Europe from Oil is going to speak up in the short term, and we haven’t done the right thing to protect you all… The price is almost bound to go up.”
A “parabolic trend” refers to a trend in which prices increase exponentially. Weir told the conference that oil prices are highly likely to hit $150 a barrel or more in the coming months as the market has to grapple with supply chain pressures as Russia tries to shift oil exports outside Europe.
He believes that if energy prices remain high for a period of time, it will eventually destroy demand because such high energy prices cannot sustainably support global growth.
Delivered in July WTI CrudeFutures prices rose 2.3 percent to settle at $122.11 a barrel on Wednesday (August 8), for August delivery Brent CrudeFutures rose 2.5% to settle at $123.58 a barrel, both posting their highest closes since March 8.
Since the Russian invasion of Ukraine on February 24,WTI Crudeand Brent CrudePrices have risen by more than 30%.
Goldman Sachs said on Tuesday that oil prices could hit $140 a barrel in the coming months.
Oil is just shy of an all-time high of $150 a barrel reached in 2008, but gasoline prices have hit record highs, which analysts attribute to tight supplies of oil products on both sides of the Atlantic and limited refining capacity.
S&P 500 The energy sector is up about 66% so far this year, leaving other industries far behind S&P 500 Index (down nearly 13%) andDow Jones Industrial Average (down 9%).