It is unusual for analysts to agree on a price target for a commodity or stock, but this time around, crude oil price targets range from $65 to $380 per barrel.
JPMorgan stunned everyone last week when it calculated that global oil prices might reach a “stratospheric” $380 per barrel if US and European sanctions lead Russia to impose retaliatory crude-output cuts.
On Tuesday, Citigroup released a report claiming that if the global economy experiences a demand-crippling recession, crude oil prices might fall to $65 per barrel by the end of this year and $45 by the end of 2023.
“In the case of oil, historical evidence implies that oil demand falls primarily during the greatest global recessions.” However, oil prices fall to around the marginal cost in all recessions,” Citi analysts wrote in a report.
Oil prices fell on Tuesday, with the US benchmark plunging below $100 as recession fears grew, raising concerns that a slowing economy would reduce demand for petroleum goods.
The US oil standard, West Texas Intermediate crude, fell 8.4 percent, or $9.14, to $99.29 per barrel. On May 11, the contract last traded below $100. Brent crude fell 9.1 percent, or $10.34 per barrel, to $103.16 per barrel on Tuesday.
“I don’t think that (oil at $380) is likely, but you have to bear in mind that anything like that might happen with a very low likelihood but a very significant impact,” says one analyst. Nilesh Shah, MD and CEO of Kotak Mahindra NSE 2.78 percent AMC