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Softer oil prices could be yet another tailwind for Asian economies

Manu Bhaskaran
Manu Bhaskaran3/19/2018 08:00 AM GMT+08  • 9 min read
Softer oil prices could be yet another tailwind for Asian economies
SINGAPORE (Mar 19): Oil prices are a key determinant of the health of the global economy and they matter a lot to this region. But predicting oil prices is a difficult task. During the commodity price boom of 2006 to 2008, the price of the benchmark Brent
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SINGAPORE (Mar 19): Oil prices are a key determinant of the health of the global economy and they matter a lot to this region. But predicting oil prices is a difficult task. During the commodity price boom of 2006 to 2008, the price of the benchmark Brent crude oil more than doubled to US$145 a barrel, before easing to around US$100 in 2014 and 2015 and then crashing to a trough of around US$28 around January 2016. Since then, the price of the benchmark Brent crude oil has more than doubled to around US$62 today.

Looking at the fundamentals of supply and demand, we believe that oil prices should fall further, perhaps by about 10% to 15%, in the coming year. However, these forecasts could turn out to be wildly wrong if political risks, particularly in the Middle East, were to materialise.

Supply likely to rise in the next one to two years

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