Global crude oil prices are expected to be on the decline this week, falling to a range of US$98-100 per barrel as global demand for oil decreases amid the prospect of economic contraction, says Thai Oil Plc (TOP), Thailand's largest oil refinery by capacity.
Last week, Brent and Dubai crude oil reference prices stood at $103.2 and $102.55 per barrel, respectively, on average. The West Texas Intermediate reference prices were lower, averaging at $94.7 per barrel.
A price change of $1 per barrel will usually cause a change in ex-refinery prices set by Thai oil refineries by between 0.15 and 0.2 baht per litre, given that the baht's value remains unchanged, TOP analysts said in their report.
A surge in global oil prices, which has intensified since the war between Russia and Ukraine erupted in late February, is expected to calm down, following efforts to curb soaring inflation by the US Federal Reserve (Fed) and the European Central Bank (ECB), analysts said.
US annual consumer prices rose by 9.1% in June, the largest increase in 40 years, according to media reports.
The Fed already decided to increase the benchmark interest rate by 0.75% in the same month, the biggest rise since 1994.
Kriengkrai Thiennukul, chairman of the Federation of Thai industries, said earlier he expected the move to subdue high inflation in the US would land its economy in a recession.
The ECB has also recently raised its key interest rate, which had been in a negative territory since 2014, by 0.5% to 0.0% in order to control soaring eurozone inflation, according to media reports.
At the same time, China continues to implement its zero-Covid policy when fresh Covid-19 outbreaks are reported, which will lead to lockdowns, strict travel restrictions and subsequent impact on global supply chains.
TOP analysts said the interest rate hikes and measures against Covid-19 will be key factors decreasing oil demand in the US and China, the world's first and second largest economies, respectively.
Lockdowns were frequently used in China to subdue the spread of the highly contagious virus. This is expected to decrease China's economic growth in 2022 to 3.4%, down from a previous estimate of 5.5%, analysts said.