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Credit Suisse Says Oil Price Could Crash to $50/Bbl

14 June 2012 14:44 (UTC +04:00)

In the bank’s "worst case" scenario, which sees a repeat of the Great Financial Recession of 2008, the price of oil would tumble to $50 a barrel and would fail to recover much beyond $80 a barrel for the next few years, it said in a note released Wednesday.

"We include a seemingly outlandishly bearish oil price scenario because it is a simple fact that a little more than three years ago prompt Brent futures prices had fallen to $46 a barrel (average quarterly! [sic]), from a record high of $123 a barrel in 2Q2008 in less than a year," it added.

The Armageddon scenario presented by the bank was accompanied by a downgrade of its base-case price forecast for Brent crude to $106 a barrel for 2012, compared to $118 a barrel in its previous estimate.

"An uncanny number of investors fear the worst, at the moment," it said, adding that "Tellingly though, markets are not signalling that demand is suddenly declining sharply...we’d be markedly more worried and bearish if the strength of futures curves had evaporated."