The “turbulent” state of the oil market

Sergey Kondratiev, Deputy Head of the Economic Department of the Institute for Energy and Finance, commented to the RT TV channel on the Brent oil price fall at the London ICE exchange below $90 per barrel for the first time since February 8.

According to the expert, the global oil market is in a “troubled state”.

“The worsening economic situation in developed countries, primarily in Europe, puts pressure on the price of oil. There are certain fears that in East Asia, in China, economic activity will recover more slowly, and demand will be lower than we might expect,” he said.

The specialist noted that there is an expectation that the market will return to a surplus, thanks to this, the supply will remain high, and demand will be low. This, as the expert emphasized, "puts pressure on the expectation of prices."

“To a greater extent, this concerns expectations, and not the real balance that is now emerging in the market, because the key uncertainty, and what can really push oil prices up, is the tightening of sanctions against Russian oil,” the analyst said.

According to him, the discussion of the price ceiling for Russian oil may lead to Russia’s refusal to supply oil to countries that join this initiative. Such a decision by Western countries, as he explained, could seriously disrupt global supply chains.

The analyst also noted that Europe and the developed countries of Asia still do not curtail their monetary stimulus programs.

“And the inflationary pressure that we see across a very wide range of commodities will also extend to oil,” Kondratiev explained.