Skyrocketing crude oil prices are likely to continue the upward march and could reach $175 a barrel by Diwali unless there is significant decline in demand from growing economies, analysts say.
Crude oil prices have risen by about $40 since March. Currently on New York Mercantile Exchange, oil traded near record high levels around $142.
"Considering the current situation and pace of price rise, crude oil rates may go up to $175 per barrel in the global market. Prices may get fresh triggers, if Israel attacks Iran this year which would affect Mideast supplies," said Religare Commodities Head, (Commodity Business) Jayant Manglik.
High volatility spurred by uncertain geo-political tensions, slumping US economy and spiralling demand across the world would continue to support the already high crude oil prices, he said.
"If you look at the technical chart, prices have moved upwardly in the last six months and we expect the bullish trend to continue further in the coming months. Prices may go beyond $175 per barrel and touch $200 per barrel," Mumbai-based Kotak Commodities Services Technical Analyst Dharmesh Bhatia said.
Amid the rising crude oil prices, there seem to be no respite for India and other countries, which are reeling under high inflationary pressure.
"Oil demand is rising higher than the supply. Although it is difficult to predict how much prices would inch up but they may rally in the range of 140-150 dollars per barrel," Industry body Federation of Indian Chambers of Commerce and Industry (FICCI) expert Anjan Roy said.
"Price rise is driving countries to look at alternative energy and conservation of energy. I think this would keep a check on a rise in additional demand for crude oil," Roy added.
According to experts, crude oil prices would decrease only when the demand falls significantly, which seems unlikely, or there is improvement in supply position.
Currently, the global demand is approximately 87 million barrels a day against the supply of 82 million barrels a day.
"The prices will decline only when demand falls, of which there is no clear evidence so far. But when demand starts falling due to de-growth, prices will also decline and this will lead to a downward spiral with low prices and increased supply," Manglik said.
A similar scenario was witnessed in the late nineties when high crude prices punctured fast-growing South East Asian economies and led to a downward spiral, he said.
Roy said the prices could be brought down only if the supply gap is addressed.