With both Brent and WTI crude trading over US$100 per barrel for weeks since Russia first invaded Ukraine, Norwegian business intelligence firm, Rystad Energy now projects that this is going to last for several more months.
Rystad said in its energy impact report on the eastern European invasion, “Oil market players are struggling to determine the extent to which Russian oil exports and supply will be impacted by sanctions and disruptions caused by the war. We believe oil prices will stay elevated and balance at around $100 to $130 per barrel through the third quarter this year, with some higher spikes likely.”
The oil product market, it said, will likely become even tighter than crude markets as oil refineries reshuffle their crude diets. Countries like Guyana are seen to be the main contributors to supply increases this year, but it will not be enough to meet demand and bring prices down in the next few months.
Rystad said the knock-on effects of these sustained price highs on global energy markets have been significant and multi-faceted.
“Prices of oil, gas and coal have all risen to near record highs and energy metals have also seen considerable price volatility. Food and fertilizer prices are also soaring. Russia and Belarus produce 37% of the global supply of potash, one of three components of [nitrogen, phosphorus, potassium] NPK fertilizer, while Russia and Ukraine represented 23% of global wheat export prior to the invasion.”
While Rystad analysts believe efficient commodity markets and substitution could dampen these shocks, it sees a food crisis looming for low-income nations.
Steep increases in food prices have been observed all over the world.
In Guyana, President Dr. Mohamed Irfaan Ali has warned of a coming wheat and bread crisis. Authorities have urged Guyanese to brace for the near future. Vice President Dr. Bharrat Jagdeo said earlier this week that the high costs will go down eventually.
Meanwhile, government has made frontal, its campaign to build Guyana’s agriculture sector to meet domestic then regional food demand.
Government has committed to absorbing increases in electricity and water rates, and recently removed an excise tax on diesel and gasoline.
It has refused calls for oil revenues this year to be used to keep costs down, arguing that this year’s withdrawal from the Natural Resource Fund has already been budgeted.
Guyanese authorities say they intend to hold national consultations to determine how it will spend GY$5 billion budgeted to find solutions to rising living costs.