Oil analysis shows that the collapse of the Silicon Valley bank left fears in global markets that prices would be affected by the crisis, which could prompt the OPEC + coalition to intervene.
These fears, supported by the decline in crude oil prices for two consecutive days, pushed Brent crude to less than $79 a barrel, as prices witnessed a decline during trading on Monday and Tuesday, March 13 and 14 (2023).
The drop in crude oil prices to levels not seen since December (2022) coincided with traders’ fears of moving interest rates again, despite being one of the main reasons for the collapse of the US Bank, according to information seen by the specialized energy platform.
Silicon Valley Bank focuses on providing the required financing to technology companies around the world, especially emerging companies, but experts who analyze oil believe that energy markets are not far from the impact of the collapse in global markets.
Does the OPEC + alliance intervene?
Experts in energy markets, polled by the specialized energy platform, believe that the failure of the United States to solve the crisis of the collapse of the Silicon Valley bank may have repercussions in the oil markets, which may eventually prompt the OPEC + alliance to intervene.
The advisor and energy expert in the Sultanate of Oman, formerly Director General of Marketing at the Omani Ministry of Energy, Ali bin Abdullah Al Riyami, said that crude oil prices witnessed an improvement at the end of last week, but with the collapse of the American bank, prices were negatively affected.
He added, “Oil analysis says that OPEC + may intervene in the event of a price drop below $70, although the matter has nothing to do with market factors, and usually the coalition intervenes when the price drop has reasons directly related to the oil market.”
Al-Riyami explained, during the oil analysis, which he presented to the specialized energy platform, that OPEC + and OPEC usually do not interfere in matters related to financial markets and banks, but in the event that prices drop to less than $ 70 a barrel, and this decline continues for a long time, it may intervene.
Conflict with producers’ interests
A senior adviser on foreign policy and energy geopolitics, Omod Shukri, said that America’s lack of control over the Silicon Valley bank crisis, and the global economy’s impact on it, which casts a dark shadow on oil prices, and what contradicts the interests of OPEC and OPEC +, may lead to intervention that reduces the production ceiling again. .
In analyzing oil, Omod Shukri ruled out a decline in prices to the level of $50 a barrel or less, especially since the economic growth of energy consumers shows that there is a need for more oil during the next few months, which means there is a need to meet market requirements.
In turn, oil analysis by energy and Middle East expert Cyril Woodshoven ruled out that the Silicon Valley bank collapse crisis would have a long-term impact on the oil markets, or constitute a real threat to supply in the markets, confirming the strength of the market so far.
Woodershoven denied the possibility of a recession, despite the weakness in the demand for oil in conjunction with inflation, stressing that the stock markets have already been affected, and oil may be affected – as well – with the return of temperatures to rise soon, which reduces the demand for fuel for heating.
The expert in energy affairs pointed out that the decline in oil prices is a product of fears related to the collapse of other banks, and a reaction to the collapse of the Silicon Valley Bank, but it is now clear that banks in Europe are stronger than they were in 2008, so there is reassurance that the Lehman scenario will not be repeated. .
Positive forecasts for the coming months
For his part, Giovanni Stanovo, an expert in oil and commodities analysis at the Swiss bank UBS, said that the bank still maintains positive expectations regarding prices, but that these prices are expected to remain in a state of volatility in the near term.
The founder of the “Vanda Insights” center interested in energy markets, Vandana Hari, adopted the same vision, as she believes that OPEC + will monitor the situation closely, but it is most likely that he does not yet have to make any decisions, since things do not require that.
At the same time, Dr. Carol Nakhle, CEO of Kristol Energy, an energy research and consulting company, said that it is too early to talk about OPEC’s intervention or not, as it is not clear whether the current impact on oil prices is temporary or permanent.
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