Crude price at $100/bbl not sustainable in long-term, says expert

Brent crude rises above $97 a barrel over fears that a Russian invasion of Ukraine could disrupt supplies. Markets in the Asia Pacific trade sharply lower after Russia orders troops into two breakaway regions of Ukraine.

In an interview to CNBC-TV18, Miswin Mahesh, independent energy and carbon market strategist spoke at length about crude oil and the current geopolitical crisis.

“For me, the important thing with regards to the oil market is, fundamentally if one gets supply and demand the market is tight, but if 3-6 months out and is USD 100-110 per barrel is the sustainable long-term price – that’s when I would say it is probably not. We do need to see lower prices. This price is not sustainable for demand,” he said.

He further said, “Going forward, I see a few things playing out. I see US shale recovering strongly, I see demand being impacted not just by the oil price but general inflation, rate rising environment etc., and so overall I see the market balancing at USD 85 per barrel level even though we see geopolitical premium and options market-linked flow activity that we think is pushing oil towards USD 100 per barrel.”

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