Oil prices cooling down? Unlikely to climb more than US$150

KUALA LUMPUR March 14 – After surging to unprecedented heights, crude oil prices may start to cool down anytime soon.

Economists and analysts said oil prices have climbed way too high and is unlikely to hit the US$200 per barrel mark.

Speculation is rife that the US may release its strategic oil reserves soon and OPEC (the Organisation of Petroleum Exporting Countries) might be influenced to increase its output.

Shale-gas producers may also find it profitable to intensify their fracking operations muting rising black gold prices.

AIMST vice chancellor Datuk Dr John Antony Xavier said, LNG (liquefied natural gas) producers may also up their game to provide more supplies to blunt the sharp spike in oil price.

"Although Russia is one of the world's top five oil producers after the US and Saudi Arabia, it’s oil output comprises only 10 percent of the global output. 

"If other OPEC countries increase their output by 1 percent, oil prices will stabilise," Xavier told DagangNews.com.

Boost renewable energy initiatives

In light of the skyrocketing oil prices, the energy sector must seriously look at renewable energy.

Renewable energy production will now be in overdrive as countries realise it is increasingly costly to rely on fossil fuels.

Companies such as Tenaga Nasional Bhd must reduce their dependency on feedstock such as coal for their coal-powered plants.

Automotive companies should intensify production of energy efficient vehicle to trim dependency on oil.

Renewable energy is getting energetic by the day comprising 11 percent of the world's total fuel consumption.

With the increasing price of oil, there will be a shift to renewable energy which will be good for the environment and help reduce the impact on climate change.

Right after the announcement of the economic embargo by the US, UK and the European Union or EU, oil prices immediately stabilised to US$109.

Too high oil prices will kill demand

Sometimes, too high a price of a product can be a bad thing.

When crude oil prices are too high, consumers cannot afford it.

In this case, when oil prices are too high, demand for oil will also be tamped down and it will slow down the price spike.

Electric vehicles will sell like hot cakes

Behind the high oil prices, there is a blessing for efficient energy vehicles.

Due to the insane oil prices, there might also be equally insane demand for electrical vehicles.

Oil prices have jumped some US$30 per barrel since Russia invaded Ukraine two weeks ago.

Now it has come down by half, thanks to the United Arab Emirates, a top oil producer, agreeing to increase its oil output.

The US is also not averse to robust oil prices and President Joe Biden has asked the US producers to increase production to counteract the steep oil prices. 

This too will help slow down oil price increases.

As a long -term measure, greater investment in the oil industry will help stanch the increase in the oil price by year-end.

To ease the oil price increase, nations can also reduce the tax on oil.

The OECD had also recently released US$60 million from its stockpile - equivalent to 12 days of Russian oil imports and this should be able to curb oil increases.

Admittedly, these are short-term measures.

Malaysians must adjust their travelling patterns by going out less or use public transport.

By taking all these measures, the impact of the price increases can be lessened. – DagangNews.com