Crude oil may collapse to $65 a barrel by the tip of this yr and droop to $45 by end-2023 if a demand-crippling recession hits, Citigroup Inc. has warned.
That outlook relies on an absence of any intervention by OPEC+ producers and a decline in oil investments, analysts together with Francesco Martoccia and Ed Morse stated in a report. Brent, the worldwide crude benchmark, final traded close to $113 a barrel.
Oil has soared this yr following the invasion of Ukraine, and banks at the moment are attempting to chart its course into 2023 as central banks increase rates of interest and recessionary dangers mount. Citi’s outlook in contrast the present vitality market with crises of the Seventies. At current, the financial institution’s economists don’t count on the US to dip into recession.
“For oil, the historic proof means that oil demand goes damaging solely within the worst world recessions,” the Citi analysts stated within the July 5 observe. “However oil costs fall in all recessions to roughly the marginal price.”
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