Oil price on the rise: Can Crude breach the $100 mark? How will it impact the stock market? - Explained
OPEC reduces 2023 oil demand by 1 lakh bpd to 29 mbpd, Saudi output cut leads to 3 mbpd shortfall Experts see a possibility of crude oil prices rising above the $100 per barrel level because of supply cuts and anticipation of economic recovery in China. "Yes, it is quite possible for the global oil price to breach the $100 mark a barrel. Significant efforts of Saudi Arabia and Russia to curtail oil supply and also extend the schedule of oil supply cuts could lead oil to breach this psychological mark," said G.
Chokkalingam, Founder and Head of Research at Equinomics Research. "Also, the fast GDP growth of India and the latest data points from China which show that China is trying to move past the worst phase of its economy could give a further boost to global prices in the short term," Chokkalingam added. However, rating agency CARE Ratings underscored that historical trends over the past two decades show that crude oil prices have failed to sustain above the $90 per barrel threshold for a long period unless major war or conflict-induced disruptions occur.
"Even in cases where there is an overshoot in international crude oil prices, historical trends suggest that corrections are likely to follow," CARE Ratings said. "Given the circumstances, Brent Crude prices will likely maintain an average range between $87 and $92 per barrel for the remainder of the financial year unless unforeseen tail risks materialise," CARE Ratings said. Rahul Kalantri, VP of commodities at Mehta Equities believes Brent Crude could cross the $100 level but he said it will not sustain above the $100 level.
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