When will the next oil crash?
A recent report on global oil prices suggests that there is a real possibility that we might see a spike in oil prices in the next few months.
The report by consultancy KPMG is a study of oil prices from 2005 to 2018, and it found that prices rose by 8.3% annually between 2005 and 2014.
The figure for the period between 2017 and 2019 is 5.6%, and the current trend is for prices to rise by 7.6% per annum.
The global average oil price is $60 per barrel, and the average Brent price is around $115 per barrel.
This is an annual rate of inflation that is very close to the historical rate of 1.7%.
The authors of the KPMGs report argued that the rise in oil price could be linked to a weakening of demand for oil.
“While the current oil price may be driven by domestic demand, the oil market is expected to be much more vulnerable to price shocks from geopolitical developments, and a strengthening of the US dollar,” the report said.
“We believe that this is the catalyst for an oil price surge that we believe is likely to occur in the first half of 2019.
If this happens, it would lead to the largest price fall in history.”
The KPMGS report also highlighted the effects of the global financial crisis that is still in full swing, including a slowdown in global demand for crude oil.
“The impact of global financial shocks is likely also to be felt in the US market, which has been among the most robust in the world, with oil demand growing in both domestic and international markets,” the KPRS report said, adding that oil prices would be a “natural catalyst” for a global economic downturn.
The price of oil has fallen by around $10 a barrel over the past year, according to KPM, so if prices fall, it could be a negative for global demand.
KPMG said the US, Canada, and Russia are the most vulnerable countries to the impact of a sharp fall in oil demand.
The US and Canada have seen a decline in oil production, and these countries are the countries that would be most at risk from a downturn in demand.
“While oil production is likely a positive in many areas, the negative impact of the financial crisis is likely greater than the positive effect of a decline, particularly in oil-producing countries such as the US,” the researchers said.