MUSCAT: Energy and economic analysts expect that oil prices would will to normal level in the coming weeks, after witnessing a decline due to fears of an expected financial crisis stemming from recent banking crisis in the United States and Europe.
According to Ali bin Abdullah al Riyami, an expert in oil and gas marketing, oil prices began to drop dramatically a week ago, from about $85 per barrel to a low of $65 per barrel.
The slump, he said, was triggered by the collapse of large financial institutions as many investors in the energy sector in general and the oil sector in particular have close linkages with the banking sector, having lent to oil companies.
He said in a statement to ONA, “I do not rule out that there will be attempts by the US administration and also by the Swiss government to find solutions to the collapse of these banks, direct intervention in supporting them, change of some regulations and laws in the US banking system, and the desire of some major financial institutions to buy Credit Suisse.
As UBS, one of the major Swiss institutions, expressed interest in purchasing this bank, in addition to the intervention of the Swiss government in supporting Credit Suisse.”
He pointed out that these attempts constitute a concern for those dealing with the oil market, as it is closely linked to banks, and all dealings of traders, exporters and suppliers of oil with international banks, so any impact on these banks will be affected by other markets, including the oil market.
Developments in the banking sector tend to have an impact on oil price trends, he noted.
“We noticed that during the previous period, as prices rose slightly due to the attention directed to the position of the US Federal Bank with regard to increasing interest to confront inflation, and on this basis it is likely that this fluctuation will continue for a period to come, especially if there are banks that may fall into a downward spiral.”
Commenting on the impact of these developments for the price of Omani crude, he said the knock-on effect would be across the board encompassing the wider global oil market, which includes the Omani benchmark.
This is because Omani crude is an integral market of the global oil market, he said. — ONA
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