Gil Befman, Chief Economist of Bank Leumi (photo by Oren Dai, Flash 90, Magma Images)
Gil Befman, the Chief Economist of Bank Leumi says today that in his opinion the collapse of the banks in the US is the one that creates the fear of damage to the real economy and hence oil prices are falling. According to Befman, as oil prices fall, the American government will take advantage of the low prices to replenish emergency stocks His.
The price of oil fell in the last week following the rise of market concerns that the tightening of conditions in the financial sector and the failure of several banks will lead to a real crisis and damage to economic activity and as a result the demand for oil will shrink. “This decrease occurred as a continuation of the downward trend in the price of oil from mid-2022. The decrease was also supported by Russian oil production, which is higher than what was expected in the market, which may even have resulted in a certain surplus in the global oil market,” says Befman.
More in-
“It seems that Russia is expected to reduce oil output in March by less than the original plan, of 500 thousand barrels per day. This, in light of the continued export of the country’s crude energy to certain-permanent trading partners. However, Russia is having difficulty finding customers for its oil distillates, which have been exported so far Mainly to Europe.
“If the price of oil continues to fall, the American government is expected to begin purchasing oil in order to fill the strategic reserves, this after the government provided oil from these reserves last year when the price of oil was very high. This step will support the price of oil to some extent and slow down the downward trend. However, If the fears in the market about a real crisis increase, it seems that the influence of the market will be more dominant and that the US government’s oil purchases alone will not succeed in preventing a further drop in the price of oil,” he concludes.
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