Crude Oil Prices to Fall Back to $75 per Barrel
The recent sharp rise in crude oil prices to above $90 per barrel is likely to be temporary, according to Mark Matthews, Head of Research, Asia for Julius Baer. He expects prices to fall back to $75 per barrel by next year as Saudi Arabia is encouraged to resume supplies due to competition from other nations.
Matthews attributed the recent rise in prices to Saudi Arabia’s production cuts, which have been extended until the end of the year. However, he said that these cuts are likely to be offset by increased production from Russia, Iran, Venezuela, and Brazil.
“Other suppliers will come in and take advantage of these high prices,” Matthews said. “Saudi Arabia does not want to do all the hard work forever by itself.”
He also noted that China, which is a major importer of crude oil, has not seen much of a slowdown in its crude import numbers. However, he said that China is not a major driver of crude oil prices.
“China has never been the marginal driver of oil prices,” Matthews said. “It is a driver for commodity prices but not crude oil prices.”
Overall, Matthews is bearish on crude oil prices in the near term. He expects prices to fall back to $75 per barrel by next year.
The following are some additional details that could be included in the article:
- The reasons for Saudi Arabia’s production cuts, including the desire to support oil prices and to comply with the OPEC+ agreement.
- The potential impact of the high crude oil prices on the global economy, including inflation and economic growth.
- The outlook for crude oil prices in the longer term, including the potential for demand to recover as the global economy recovers from the COVID-19 pandemic.
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