Oil Price Sensitivity Analysis and Macroeconomic Opportunities

Oil Price Sensitivity Analysis and Macroeconomic Opportunities

International crude oil prices are sensitive to oil production policies, geopolitical issues, government regulations, and several other factors. For improved foresight and scenario-planning capabilities, this Frost & Sullivan research service encompasses an oil price forecast model until 2025. The model was developed through a comprehensive scenario-based analysis of demand- and supply-side factors influencing oil prices. Price forecasts until 2025 were generated under 3 scenarios—baseline, high, and low oil prices.

To establish the sensitivity of industry output to oil prices, a comprehensive correlation exercise was undertaken for multiple countries. Food products, chemicals, pharmaceuticals, wholesale and retail trade, and finance and insurance demonstrated a strong negative correlation with oil prices. Qualitative findings further support the nature and strength of the correlation between oil prices and these industries.

The study also delves into a scenario-based impact assessment across countries. The impact of the high and low oil prices scenarios was explored for a combination of net oil exporters and importers, that is, Saudi Arabia, Qatar, the United Kingdom, and India. For the United States, Saudi Arabia, and Russia, GDP growth, inflation, and fiscal deficit outlooks were explored in detail in light of price scenarios. For industries showing a strong negative correlation with oil prices, scenario-based industry forecasts were generated.

KEY ISSUES ADDRESSED

How will oil prices evolve until 2025?
Which key demand- and supply-side factors are influencing the price trajectory?
Will the impact of demand- and supply-side factors on oil prices vary until 2025?
How strongly are oil prices correlated with output across various industries?
What is Saudi Arabia’s GDP growth outlook under a high and low oil price scenario?
How will the US’ fiscal deficit evolve under the baseline oil price scenario?
Under a high oil price scenario, what is Russia’s chemicals' IIP outlook?
What economic diversification opportunities will oil price movements generate?