BAKU, Azerbaijan, March 2
By Leman Zeynalova – Trend:
Growing risks for sustainability of oil and gas supplies due to the crisis in Ukraine are also added to the factors triggering higher oil prices in recent months, Ibrahim Ahmadov, spokesperson for Azerbaijan’s state oil company SOCAR, told Trend.
“While in the past months the global economic growth led to an increased demand for energy resources, oil producers were not able to boost the oil output to the pre-pandemic levels in a short term due to the lack of investments in exploration and production. Over the past weeks, experts regarded the escalation in Ukraine as an additional factor putting pressure on the market. Amid the difficulties and restrictions to financing the purchase of some oil grades, the demand for other oil grades is growing, thereby increasing the prices for the latter,” said Ahmadov.
SOCAR’s representative went on to add that the escalation of the geopolitical situation is considered by the market as an uncertainty signal.
“While many talk about the possibility of price hike to $125 per barrel, such high prices may have a backfire effect, if they trigger higher inflation and recession in major economies. Nevertheless, recession in major economies can have a bearish pressure on oil demand and subsequently, on oil prices. Therefore, interests of oil producers and buyers may coincide in the medium term in ensuring relative stabilization of prices for energy, including oil,” Ahmadov concluded.
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