Thu, Oct 18, 2018 - Page 12 News List

Oil to stay high

By Kao Shih-ching  /  Staff reporter

Global oil prices are expected to remain high amid escalating tensions between the US and Middle East nations, but might drop slightly next year due to a global economic slowdown, Prudential Financial Securities Investment Trust Enterprise Co (保德信投信) said yesterday.

Even though the International Energy Agency has cut its estimates of global oil demand growth for this year and next year, oil prices could continue to rise, as crude supply shows no signs of progress, Prudential Financial fund manager Eason Yang (楊博翔) said.

It is likely that global crude prices would continue to climb in the short term, given that the prices of West Texas Intermediate and Brent crude yesterday increased for the fourth consecutive day, trading at about US$72 and US$82 per barrel respectively, the fund manager said.

“Oil prices will continue to rise due to a potential reduction in crude supply and output, given the US’ sanctions on Iranian crude exports due next month,” Yang said.

Prudential Financial did not rule out the possibility that global crude oil prices would surpass US$100 per barrel next year.

Asked if the price increases would bring the world economy to the brink of a recession, Prudential Financial said the levels would still be affordable for the public.

The global ratio of oil expenditure to nominal GDP has held steady below 3 percent since 2013, and the ratio is forecasted to fall even further to 2 percent after 2023, Prudential Financial said, citing Merrill Lynch estimates.

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