The Bank of Korea: "International Oil Prices in Late August Around Mid to High $60s... Future Outlook Diverges"

Bank of Korea 'Overseas Economic Focus'

[Asia Economy Reporter Kim Eun-byeol] In August, international oil prices (based on Dubai crude) fell to the mid-to-high $60 range, with major institutions showing divergent forecasts for future oil price trends.

According to the Bank of Korea's 'Overseas Economic Focus' on the 29th, from August 1 to 25, the average price of Dubai crude was $68.8 per barrel. This represents a drop of about $5 from $73 in July. On August 20, the lowest point during the month, the Dubai crude price fell to as low as $64.6 per barrel.

The Brent crude price averaged around $70.5 from August 1 to 25, also down from $75.2 in the previous month. The lowest price in August was $65.5 per barrel.

The Bank of Korea analyzed the recent decline in oil prices as "a result of concerns that oil demand recovery will be slow due to the spread of the COVID-19 Delta variant and expectations of a stronger US dollar." The International Energy Agency (IEA) revised down its global oil demand forecast for the second half of this year compared to the previous month, reflecting the spread of the Delta variant.

Since the US Federal Reserve (Fed) is likely to begin tapering (reducing asset purchases) this year, the dollar may strengthen as a result.

The Bank of Korea reported that major institutions have presented conflicting forecasts regarding future oil prices.

Some, including JP Morgan, expect oil prices to rebound considering low inventory levels in major countries and the conservative production increase stance of OPEC Plus, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries. On the other hand, institutions such as Bank of America (BofA) forecast that oil prices will fluctuate around $60 per barrel for the time being due to the impact of the Delta variant spread.

Meanwhile, from August 1 to 25, the LMEX non-ferrous metals index rose 0.4% compared to the previous month. Aluminum prices increased by 3.7% month-on-month due to Russia's export tariffs and reduced production in China, while copper prices fell 0.9% due to Chinese economic indicators falling short of market expectations and a global manufacturing slowdown caused by the Delta variant spread. The S&P grain index rose 2.8% compared to the previous month.

This content was produced with the assistance of AI translation services.