Citigroup Inc. warned that crude oil could fall to $65 per barrel by the end of this year, and then plummet to $45 by 2023 if there is a recession.
This outlook is based on the absence of intervention from OPEC+ producers, and a decrease in oil investments. Analysts Francesco Martoccia (with Ed Morse) stated in a report. Brent, the global benchmark for crude oil, was last traded at $113 per barrel.
After the invasion of Ukraine, oil prices have risen significantly this year. Banks are trying to chart their course through 2023. As central banks raise interest rates, recessionary risks increase.
Citi’s outlook compares the current energy market to the 1970s crisis. The bank’s economists don’t expect the US to enter a recession at the moment.
The July 5 note by Citi analysts stated that “for oil, the historical evidence indicates that oil demand goes negatively only in the most severe global recessions.” “But oil prices fall in every recession to approximately the marginal cost.”
