Gas vs Oil prices – Gas prices have increased considerably
Benchmark 1-month European Gas Price Benchmark 1-month Brent Crude Oil Price
4,5
4
3,5
3
2,5
2
1,5
0 Jan-22
Mar-22
May-22
Jul-22
Sep-22
Source: BER, 2022
Oil prices are a key determinant of agricultural input prices, ranging from fertiliser and chemicals to plastics and other packaging.
Another potential upside risk for oil prices is the OPEC+ production policy. As mentioned, OPEC+ has slowly rolled back its supply cuts and incrementally increased production each month. However, more recently, OPEC+ decided to reduce production for the first time since 2021. At a production policy meeting in September, members agreed to cut total production by 100 000 barrels per day (b/d) in October. OPEC+ noted that concerns around global demand required offsetting action. Although the decline in production is not dramatic, it does leave the door open to more supply cuts should the cartel see fit. Conversely, some factors could apply downward pressure to the oil price, and we’ve already seen some of these come through. On the demand side, after the
initial strong global growth rebound in 2021, the outlook for the global economy has deteriorated.
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