What will happen to oil prices amid the prospect of wider conflict in the Middle East?
“Things seem like an exercise in the theory of probabilities. A variety of outcomes are possible from this situation. You remember the year 2006, when due to exactly such tensions in the Middle East, an increase in the price of oil by nearly 30% occurred. However, at the moment it’s not 2006. Many things have changed since then,” commented Prof. Grigor Sariyski from the Institute for Economic Studies at the BAS.
Today, the situation is different – thanks to the “shale revolution” in the USA, the country has become one of the largest exporters of gas and oil, which somewhat stabilizes the world energy market.
Associate Professor Sariyski noted that despite the danger of limiting supplies from Iran and the eventual blocking of the Strait of Hormuz, the world market has the opportunity to compensate for these losses.
According to him, the question of the increase in the price of oil depends mostly on the political will of the OPEC countries and their allies, as well as on the reaction of the market to these events. Although the price of oil is rising by about 3% daily, it is still lower than last year.
“The possibility of a limited increase in the price of oil is much greater than the opposite. But a shock price hike is unlikely“, Prof. Sariyski told Bulgaria ON AIR.
One of the main challenges for Europe, according to Sariyski, would be the possible blocking of supplies of liquefied natural gas from Qatar, which provides about 20% of the world market of this resource. This would particularly affect economies such as Spain and Italy, which rely on natural gas not only for heating but also for industrial needs.
Associate Professor Sariyski also drew attention to Bulgaria’s internal problems, emphasizing the chronic financial problems of “Toplofikatsia Sofia”. With debts of BGN 1.6 billion, the company is in an extremely difficult situation. According to him, the problems of Toplofikatsia are not from yesterday and are the result of long-term bad management and lack of investment in the infrastructure.
#Economist #cut #oil #forecast
