Crude oil may drop to $65 a barrel by the end of this year and could sink to $45 a barrel by the end of 2023, if the recession hits, warns Citigroup as reported by Bloomberg.
Citigroup analysts including Francesco Martoccia and Ed Morse said in a report that this scenario may arise in the absence of any intervention by producers from the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, and a decline in oil investments.
It made this prediction after comparing the current energy market with the crises of the 1970s.
“For oil, the historical evidence suggests that oil demand goes negative only in the worst global recessions. But oil prices fall in all recessions to roughly the marginal cost,” said the analysts in the report.
The Citigroup warning is contradictory to a recent prediction from JPMorgan.
Analysts from the institution, including Natasha Kaneva, warned global oil prices will hit $380 a barrel if US and European penalties compel Russia to inflict retaliatory crude output cuts.