Dan Yergin, vice chairman of S&P Global Inc. and an authoritative energy expert, commented on Friday (24th) that international oil prices have been falling as investors focus on recession risks in the United States and Europe.
International oil prices have rallied unstoppably since last year, surging to highs after Russia launched its war on Ukraine, but since the end of May,Brent CrudeFutures have fallen from above $120 a barrel to around $110 a barrel, or about 10% lower. During the same period,WTI CrudeFutures fell more than 9%.
Energy authority expert Eugene said in an interview on Friday (24th) that investors have recently turned their attention to two key issues of “recession” in the United States and Europe.
“The Fed has chosen to fight the inflation curve, and even risk a recession, which is one of the main reasons for mitigating the rapid growth in oil prices,” he said.
Federal Reserve Chairman Powell said in testimony before Congress this week that the Fed would “unconditionally” curb inflation and could raise interest rates enough to tip the economy into recession, saying it would be extremely challenging to achieve a “soft landing” for the economy.
Eugene also mentioned: “Another main reason is that Russian President Vladimir Putin has extended the Ukraine-Russian war to an economic war against Europe, and Putin is trying to destroy the EU economy.”
Russia has restricted gas supplies to Europe through the Nord Stream 1 pipeline, reduced gas supplies to Italy, and cut off all gas supplies to Finland, Poland, Bulgaria, Denmark and the Netherlands.
The International Energy Agency recently warned that Russia is likely to cut off natural gas supplies to the whole of Europe, which may seriously affect European heating, power generation, and industrial production in winter. The threat of total outages has led European countries to consider burning coal as a replacement for dwindling natural gas.
The German government has said that a complete supply cut in Russia could lead to a collapse in the energy market, as much as the financial crisis caused by Lehman Brothers, and the country has now upgraded its natural gas plan to the second level of “alertness”.
Eugene added that the outlook for demand in China, the world’s largest oil consumer, is also uncertain, and China has slowly lifted the blockade. Determined to restrain oil prices higher.
Whether future oil supply can meet market demand has become the focus of market attention. The Organization of the Petroleum Exporting Countries and its allies (OPEC+) agreed to expand production in early June, and will increase production by 648,000 barrels per day in July, equivalent to 0.7% of global demand. , to offset the decline in Russian oil production.
Edward Gardner, commodities economist at Capital Economics, said: “We think OPEC+ will take a more liberal approach, allowing the few members with spare capacity to produce more.”