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oil price of $100
Economy

Will oil cost $100 per barrel: forecast

26.07.2020
2 min read

How oil worth $100 will be reflected on exporters and importers

The situation with oil on the world market continues to worsen. The U.S.-China trade war and sanctions against raw materials from Iran threaten to affect important processes and slow down economic growth in many countries. Experts are afraid that the oil price of $100 is no longer a fantasy, but a possible reality.
During the year, the price of Brent raw materials rose by 33% and shows the highest values in a short period. The increase in oil price in case of an increase in demand is a natural situation, which indicates positive processes in the world economy. The dynamics also play a big role. The demand for oil is beneficial for exporters, it increases the income of the country and its companies. However, the situation is not so bright for the consumers – the growth of the cost per resource may increase inflation. Some countries will not be able to buy oil in the required volumes and then the high price will turn out to be negative for both exporters and importers. Experts note the risk to the economy in China and a number of European countries.
The seasonality factor should also be taken into account. With the onset of the warm season, the amount of raw materials consumed decreases, and together with the global slowdown in economic growth this may have a significant impact on fuel demand.
The critical moment for the world market will be the price of oil at $100 and higher. But here it is also necessary to take into account the currency rate. According to the experts’ analysis, if by the end of the year the price of raw materials will be within $100, then GDP growth will drop by 0.6% against current forecasts for the next year. Meanwhile, inflation may increase by 0.7%.
Donald Trump imposed sanctions on the sale of oil by Iran, which shook the global financial market. The volume of 800 thousand barrels per day is a significant indicator and helps to revise trends in the economy. Instability in this segment extends to other segments, and if not addressed, the consequences can be extremely serious.

oil price of $100

The U.S., the UAE and Saudi Arabia promised to compensate for the volumes of Iranian raw materials, but as for the U.S., the oil reserves of this brand are not so high here.
The increase in the cost of oil will play into the hands of large exporting countries, including Norway, Nigeria, Saudi Arabia and Russia. They will be able to strengthen the economy and reduce the budget deficit thanks to large revenues from sales. For importing countries, however, this situation will create the opposite effect. The budget and the national currency rate will suffer, as well as the inflation rate will increase. Central banks will have to raise rates to reduce the impact on economic development. India, Turkey and Ukraine will be most affected.

Tags: Economic
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