“Covid’s spread in China is the most depressing factor affecting the market,” Lipow told the network. “If [Covid] spread throughout China resulting in a significant number of lockdowns, the impact on the oil markets could be substantial “. However, Covid is not the only downside to oil prices. Reuters’ John Kemp noted in his last column that the economic slowdown in Europe and North America has also contributed to the latest oil price trends. Kemp also noted that there has been increased uncertainty and volatility in the markets, which has led large oil buyers such as hedge funds to take a more cautious approach to markets. The coordinated release of up to 240 million barrels in several months by the United States and members of the International Energy Agency has also helped reduce prices, but the results of this move, based on historical data, are likely to be short-lived. especially since their daily total will be lower than what the IOC expects to lose from Russian supply this quarter. Despite falling prices, concerns about a possible global recession remain, mainly because even if crude oil prices fall, fuel prices have not. As the Wall Street Journal reported earlier this month, the combination of high oil prices, labor shortages and strong demand for goods have combined to cause a great deal of pain in the freight industry. This pain will most likely be transmitted to customers, eroding their purchasing power. However, according to experts, it is too early to talk about the risk of recession and oil prices will have to remain higher for an extended period of time to make that risk immediate, according to a report by Yahoo Finance. According to Andy Lipow, again, Brent crude oil will have to stay at around $ 120 a barrel to make the risk of recession serious enough to worry about it in the US. in order to trigger a recession in the United States. In Europe, however, a recession is much more likely due to higher gas prices, according to a senior portfolio manager from the ICAP ETF. At present, gas prices in Europe are equivalent to $ 240 per barrel of oil, which has undermined the competitiveness of European industries and caused great pain to consumers, Jay Hatfield told Yahoo Finance. Despite all these recent developments, there are still backward winds for prices, as evidenced by the Brent recovery to $ 100 and above, at the time of writing. OPEC made it clear to the EU this week that it would not intervene to fill a possible gap left by lost Russian barrels if Brussels decided to impose an embargo on Russian hydrocarbons. And he painted a bleak picture. “We could see a loss of more than 7 million barrels per day (bpd) of exports of Russian oil and other liquids as a result of current and future sanctions or other voluntary actions,” OPEC Secretary-General Mohammad Barkido was quoted as saying by Reuters. “Given the current outlook for demand, it would be almost impossible to replace a loss in volumes of this magnitude.” Such a loss is highly unlikely, as the EU would not be willing to inflict such damage on its own, but the very prospect of losing supply of this magnitude is likely to continue to face sky-high winds, such as fears of a catastrophic demand caused by lockdowns. of China. By Irina Slav for Oilprice.com More top readings from Oilprice.com:
