On Friday (May 5), local time (May 5), Greg Ebel, CEO of Canadian oil and gas pipeline company Enbridge, said that despite the recent sharp drop in international oil prices, current energy prices are beneficial to ordinary consumers and producers.
Due to concerns about economic recession and the Fed's interest rate hike, the prices of Brent oil and WTI oil fell sharply. Although oil prices rebounded strongly on Friday, they still fell by more than 6% and 7% respectively this week. The current prices are $75.30/barrel and $71.32/barrel.
International oil prices have fluctuated between $70 and $80 a barrel for most of this year.
“Oil prices are in a sweet spot that benefits consumers and makes a lot of money for our producer customers,” Enbridge said in an interview.
Ebel pointed out that despite weak economic activity and signs of slowing inflation, the employment data remained strong, so it is difficult to determine the future direction of oil demand.
On the supply side, Western sanctions on Russian oil are creating further market volatility, he warned.
The Group of Seven (G7) and the European Union began to ban imports of Russian seaborne crude oil in December last year, and further extended the ban to refined oil products in February this year.
PVM oil market analyst Stephen Brennock believes that the sharp drop in oil prices in the past week was not driven by fundamental factors, but was affected by recession risks and a new round of US banking crisis.
Analysts at Commerzbank pointed out that concerns about oil demand are overblown and expect an upward trend in oil prices in the coming weeks.
At the beginning of last month, several major OPEC+ producers led by Saudi Arabia announced that they would cut production by a total of 1.66 million barrels per day from May to December this year as a "precautionary measure aimed at supporting the stability of the oil market."
Some people believe that if oil prices continue to fall in the future, OPEC+ will not sit idly by and will take more actions if necessary. The alliance will hold a face-to-face policy meeting in Vienna on June 4.
The International Monetary Fund (IMF) said in its latest economic forecast for the Middle East and Central Asia that Saudi Arabia needs an international oil price of $80.90 a barrel to achieve a balanced budget this year.
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