Oil prices remained volatile in 2022 driven by geopolitical tensions, demand worries

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The year 2022 witnessed unprecedented volatility in the prices of crude oil amid ongoing geopolitical tensions and global economic distress.

Crude oil prices surged to a 14-year high of $140 per barrel in March but have now tapered off to around $80 per barrel.

The fluctuations in the prices began in February after Russia, one of the largest producers of crude oil, sent troops into Ukraine.

Crude prices have come down in recent months due to deteriorating demand amid global inflation and recession fears. Central banks around the world have hiked interest rates to tame record-high inflation.

Energy experts say that benchmark Brent oil prices are seen rising from current levels by March but are unlikely to breach $100 a barrel, according to a poll conducted by Moneycontrol.

A poll of 14 energy experts reveals that they expect some upward pressure on the price of crude oil but are divided on the quantum of the increase. Five experts said it would be at $80-90 a barrel and the same number said it would be in the $90-100 range.

Earlier this month, the Reserve Bank of India pegged Indian crude oil basket price at an average of $100 per barrel for its inflation projection of 6.7 percent in 2022-23, signalling that it expects limited upside to crude oil prices for the rest of the fiscal year.

Despite an entire year of volatility, uncertainty has not settled for crude oil. According to the Moneycontrol poll, the price of crude will be majorly impacted by low demand or recession fears.

Countries around the world, including the largest economies, such as the US and the UK, are experiencing record-high inflation and facing fears of a recession. Global economic challenges pose a direct impact on oil demand. Additionally, demand has also slumped in China, the world’s largest consumer of oil, due to its strict COVID-19 policy.