Although crude oil prices fell on Friday, energy costs in the coming years could be a different story, an oil analyst says.
“I think the energy transition will move into another quarter,” Tom Kloza, global head of energy analysis, said on Yahoo Finance Live (video above). “This will really herald years of pain to come.”
Russia’s invasion of Ukraine has kept oil and other energy costs at historically high levels as Europe is forced to offload its reliance on Russian natural gas.
After Russian President Vladimir Putin called for a partial military mobilization earlier this week, Kloza noted that Russia cutting off the flow of crude oil and refined products “is still a very, very significant threat.”
Oil prices hit an eight-month low on Friday as West Texas Intermediate (CL=F) crude futures fell 6% to $78 a barrel, while Brent futures (BZ= F) fell 5% to just above $85/barrel.
Meanwhile, U.S. gasoline prices have mostly been on a steady downward trend since hitting a record high in mid-June.
“We survived a gas scare when we were at $5.0165 on June 14,” Kloza said, adding that he doesn’t see a big move higher for the rest of 2022.
In 2023, however, “we will see what I call ‘petronoia’: the fear that there will not be enough oil molecules to go around, especially in the gasoline season,” explained the analyst. “It will manifest, and then maybe we’ll have another movement.”
He added that he doesn’t think gas prices in 2023 “will be much more expensive than what we saw in the summer of 2022. But I do think the bias is towards higher energy prices rather than be lower.”
In addition, current demand for certain US refined products has been high and a harsh winter could affect supplies.
“Diesel and heating oil and jet fuel – these are the products to watch,” Kloza said.
Ines Ferre is a market reporter for Yahoo Finance. Follow her on Twitter at @ines_ferre.
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