Trafigura chief warns of 'parabolic' rise in oil prices

Trafigura warns that oil prices could show a 'parabolic' rise that threatens the economy. The HEAD of the oil trader believes that the situation in the energy sector is critical, since sanctionsagainst RUSSIA restrict oil supplies

Oil prices could see "parabolic" growth this year, hitting record highs and slowing economic growth, said Jeremy Weir, chief executive officer of oil trader Trafigura.

“We are in a critical situation,” Weir said at the Financial Times Global Boardroom conference on June 7, the paper said.

Oil prices could soar to all-time highs, he said, as restrictions on Russian oil exports imposed by the US and EU exacerbated already tight supplies created by "years of underinvestment." In the next few months, prices could overcome the barrier of $150 per barrel, Weir said.

A parabolic movement in the markets is usually referred to as the moment when the price of a product, which has been rising before, suddenly rises to previously unseen levels and looks like the right side of a parabolic curve on price charts.

Weir also believes that rising prices for other commodities, such as copper and lithium, will also put pressure on global economic growth and could eventually trigger a slowdown in the economy. “If we see very high energy prices for a certain period of time, we will eventually see a destruction of demand,” he explained.

Brent crude, the international benchmark for oil now trading at around $120 a barrel, hit an all-time high of $143.9 a barrel on the eve of the financial crisis in 2008.

The head of JPMorgan urged investors to prepare for the "economic hurricane"

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Weir is not the first to predict a rise in global oil prices. For example, Jamie Dimon, chief executive of JPMorgan, said last week that prices could reach $150 or $175 a barrel this year. Analysts at Goldman Sachs predict that oil could average over $140 a barrel in the third quarter.

Trafigura was one of Rosneft's largest exporters of crude oil by sea prior to Russia's special military operation in Ukraine. Russia previously accounted for 6% of Trafigura's global business, Weir said, but now the company has largely ceased operations in the country.

Weir also noted that he sees no signs of a slowdown in oil demand yet, despite the fact that diesel and gasoline prices have already reached record levels due to a lack of refining capacity.

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