Christof Rühl, member of the Advisory Board of Crystol Energy and a Senior Fellow at the Harvard Kennedy School and the Center on Global Energy Policy at Columbia University, discusses the latest global macroeconomic developments and oil markets in this weekly interview to the Gulf Intelligence.
Christof comments on the recent market dynamics, which, ultimately, have not seen any big change. We have those countries which have managed to vaccinate a majority of their populations and will now try to head towards herd immunity because people will not accept a return to the complete lockdowns, we had in 2020. The problem is that almost nobody has the required 80% vaccination rates yet for herd immunity, and so the cat and mouse game with the virus will continue for a while. If there is no serious mutation which invalidates the protection that the vaccination gives us, then I do think that this is still part of learning to live with the virus. It won’t result in the same kind of complete lockdown scenario which we had a year ago.
On the implications these developments have had for oil prices, these are still not clear as the world remains awash in oil. If OPEC+ doesn’t change its output policies, then most of the investment banks will have to call back their forecasts of $80+ oil for the end of this year. We will be looking at more moderate oil prices, which is acceptable. Everybody can do that, including those oil producers in the Middle East.
Christof further discusses the outlook for global economic growth. According to him, economic growth will lose its strength. That’s the expectations many of us have had for a while – the growth we saw in the first half of the year will in retrospect be seen as more of a flash in the pan. He expects that we will find it hard to reconnect with the elevated growth levels witnessed before the Covid-19 pandemic started. The oil markets will probably fall lower without further support from OPEC. The question facing traders now is whether a $65 per barrel is the right point to get back into the market? The answer comes back to what you think OPEC+ will be doing through to the end of the year
Christof is joined by Maleeha Bengali, Founder, MB Commodity Corner. Sean Evers, Managing Partner at the Gulf Intelligence, moderates the discussion.
Watch the full discussion:
“Oil Intensity: The curious relationship between oil and GDP“, Christof Rühl and Tit Erker, May 2021
“Biden’s call on OPEC to relax production cuts and oil demand outlook“, Dr Carole Nakhle, Aug 2021