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In an interview on Dubai TV, Mohammed Hashad, Director of Research and Development Department at Noor Capital and member of the US Association of Technical Analysts, tackled the latest developments in financial markets, particularly the most prominent one; namely the surging oil prices that touched record levels, he also commented on expectations that oil prices would reach $200 a barrel, whether that was possible, and whether the global economy, in general, could withstand such levels.
Hashad said: “It is obvious that energy prices are soaring, specifically West Texas Intermediate crude, the US crude oil, which started this week’s trading on an upward price gap in which it touched the USD 130 per barrel level, the highest level recorded since July 16, 2008, and with the continued escalation of political and geopolitical tensions, it is likely to raise further fears in the markets about the prospects of an energy crisis, in general.”
With regard to the expectations that adopt the possibility of oil rising to the USD 200 a barrel level, Hashad stressed: “It is still too early to answer this question, in light of the state of uncertainty about the course of events, but with any kind of negotiations or even at least reaching a preliminary agreement, oil will turn to profit-taking operations that, in turn, will lead it to retreat again, and of course if the skirmishes and military tensions continue, I believe that oil would continue its uptrend”.
Amid threats to impose a ban on Russian oil and gas exports, and whether this step is applicable, especially given the volume of production that Russia represents in this sector, Hashad stressed that Russia is undoubtedly a major and important player in the oil markets. If we go back a year or two, we will discover that Russian oil and gas production is large. In 2020, Russia produced 10.27 million barrels per day, and in the following year 2021, its production reached 10.52 million barrels per day, which means that Russian production is constantly increasing, and represents considerable figure that cannot be ignored or dispensed with. Today we see the United States of America supporting the imposition of an embargo on Russian oil, and at the same time Germany looks at its direct interest. Just a few days after the beginning of the recent events, Germany now does not have much time to arrange for the necessary energy for electric power plants.
Hashad believes that the decision to impose a ban on Russian oil will be destined to withdrawal as will be very difficult to implement, especially in light of the importance of Russian oil production for the European Union countries that consider Russian oil as very important to them.
The Russian ruble has lost about 40% of its value since the beginning of the latest events, there are repercussions of the current state of the Russian currency on the inflation situation inside Russia, questions are also raised about the Russian economy’s ability toendure this major currency decline. In this respect, Hashad pointed out that, historically speaking, the ruble is now at its lowest level ever and with the continued imposition of economic sanctions by western powers, the Russian economy, as Hashad believes, will be negatively affected, and it is likely that it will incur an exorbitant bill. This may lead to a decline in the Russian gross domestic product from two to three points, at least, and will lead to at least 3 point increase in inflation as well, to say the least, after the last inflation data of 8.7 in January.
As for gold, which surpassed $2000 per ounce, and whether gold prices are expected to reach a new resistance point; Hashad commented: “$2035 an ounce is the next major resistance level for gold prices”.
