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Page added on March 9, 2022

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Worst-case oil forecast upped to $240 a barrel

Consumption

Some experts predict the price of oil could reach $240 a barrel this summer if Western countries roll out more sanctions on Russian oil exports. And the high prices could lead to a global recession as soon as this year.

If more Western countries join the U.S. and impose oil embargoes on Russia, it would create a 4.3 million barrels per day hole in the market that simply cannot be quickly replaced by other sources of supply,” says Bjørnar Tonhaugen, head of oil markets at the Oslo-based energy research firm Rystad Energy, in a note on Wednesday.

Rystad’s new $240-a-barrel forecasts were echoed in predictions by Goldman Sachs and Barclays earlier this week.

Goldman hiked its crude price forecasts for Brent oil to above $200 on Tuesday, noting the world could be facing one of “largest energy supply shocks ever.” Barclays, a bit more optimistic, noted disrupted Russian seaborne crude supplies in its worst-case scenario could push prices above $200, but called the situation “highly fluid” and did not revise its 2022 forecast for Brent crude oil.

Russia’s Deputy Prime Minister Alexander Novak said on state television Mar. 7 that Western countries could face oil prices of over $300 per barrel, threatening “catastrophic consequences for the global market,” if Russian oil is cut off. However, those views have not been corroborated by major independent oil watchers.

While Novak’s comments appear to be threats made to stop the U.S., U.K., and EU from sanctioning Russia’s oil supply, Tonhaugen does agree oil prices rising above $200 will have serious consequences.

“Oil at $240 per barrel would trigger a global recession,” he said.

Global recession

Hovering around $130 a barrel this past week, oil is already nearing its highest price in history—the all-time peak was in July 2008, when crude oil peaked at $147.02.

That’s concerning because almost every global postwar recession has been preceded by a similar rise in oil prices, according to 2007 paper published by economists at the University of Warwick. The cost of crude rose sharply in 1973, in 1979, in 1990, and in 2007, all years that were followed by recessions.

A recession is likely to happen again, according to Tonhaugen, who also adds that when oil becomes too expensive for people and governments to afford, it can trigger something called “demand destruction.” That means that consumers and nations stop using oil when the price spikes, and they don’t return to it even when prices go down again.

“It is clear that oil prices will continue to rise until they reach an unsustainable level that curtails demand,” says Tonhaugen.

But one thing Rystad and most other analysts, traders, politicians, and anyone watching the oil markets are saying is that this feels like nothing seen before.

“This is the largest energy crisis in decades, and the impact on the world’s most important commodity is going to be unprecedented,” Tonhaugen says.

Fortune



6 Comments on "Worst-case oil forecast upped to $240 a barrel"

  1. EnergyFlowingFromAirToLightBulb on Wed, 9th Mar 2022 9:39 pm 

    I can see the energy coming into an transparent incandescent lightbulb. It looks like multiple small fishing wire of various color. There is also some kind of invisible energy wave, similar to waves in a river. I can clearly see the direction of the energy wave moving into the lightbulb. These are difficult to see so this might not be totally accurate.

    https://www.pngall.com/wp-content/uploads/2016/03/Light-Bulb-Free-Download-PNG.png

  2. IWillStartStealingStuff on Wed, 9th Mar 2022 9:48 pm 

    if I see houses with no humans activities for more then 6 month I will go in and steal stuff including car in the driveway.

    I don’t mind to live in world with few people around me.

  3. EarthIsNowADystopianNightmare on Wed, 9th Mar 2022 10:50 pm 

    Earth is turning into hellish dystopian nightmare. See me previous comments. No point to repeat myself here. 5:05

    https://www.youtube.com/watch?v=G-JfFhbO6kg

  4. EarthIsNowADystopianNightmare on Wed, 9th Mar 2022 10:58 pm 

    Finally, now we are getting serious here about turning earth into a dystopian hellish nightmare. I love it. 1:15 to 1:25, they kids looks like the children of the devil. I love it

    https://www.youtube.com/watch?v=PP_Yo4EOVZ8

  5. Theedrich on Thu, 10th Mar 2022 1:19 am 

    Where does the U.S. get off sanctioning everyone? Maybe what we really need in order to put an end to American arrogance is what the Empire of Lies constantly threatens everyone else with:  a full-blown nuclear war.  That way all of the pain it inflicts on the rest of the world in its missionary zeal for global control will put a final end to the historical absurdity of Yankeeland, the “indispensable nation.”

    The DeepStatists are oblivious to history and the massive crimes they have committed in the name of righteousness and love of Yahweh.  The “narrative” (i.e., the currently dominant propaganda) is all that matters.  95% of all academics cravenly submit to this drivel, lest they lose their contracts, their sinecures and the approval of their lemming-like peers.  Ideological conformity is all that matters, whether in government, education or big business.

    Meanwhile, the DC elites are importing parasites from around the world and giving them money and domiciles at the same time that the regime ignores the plight of millions of homeless in American cities.  This, in the same way that it ignores the deadly narcotics horror which supplies that regime with $billions in bribes and likewise ignores the lawlessness that is overtaking Democrat-run cities and states everywhere.  Every index of learning, culture and civility imaginable is in decline in America, because that is what the people want.  It is, thus only natural that a traitorous, incoherent fossil has now been raised to the throne by popular demand, accompanied by a female viceroy whose one and only qualification is her negritic femaleness.

    Out of sight and mind is, however, the fact of diminishing returns in fossil-fuel and other critical domains.  This decline is a result of physics and history, neither of which plays any role in popular thinking.  The speechwriters behind the enthroned zombie ventriloquize innumerable promises at the same time that they blame the foregoing president for everything the bureaucratically imbedded mafia has itself caused.  Alas, history, diminishing returns, and resource exhaustion are impervious to blather.

    The Imperial mafiosi, the crime lords, the virtue-signalling bureaucrats, the academicians, and the lemmings like to think that they are part of something too big to fail.  But they forget one thing:

    The bigger they are, the harder they fall.

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