Sam Ikeotuonye, with agency reports
Lagos — Financial services firm Morgan Stanley increased its oil price forecasts for the Brent crude to $120 per barrel in the third quarter of the year, citing a “relentless drawdown in global inventories” and lower output from Russia, according to Reuters.
Goldman Sachs also raised its 2022 Brent spot price forecast to $135 per barrel from $98 and its 2023 outlook to $115 from $105.
These forecasts came as Barclays and Oslo-based consultancy Rystad Energy also said Brent could rise to $200. According to Rystad Energy, prices could reach $200 if Europe and the United States banned Russian oil imports.
Barclays, on its part, said disrupting most of Russian seaborne crude supplies in its worst case scenario could push prices above $200, although it did not revise its 2022 Brent forecast saying “the situation remains highly fluid.”
More than half of Russia’s March loadings so far were reported unsold and, if sustained, this could represent a 3 million barrel per day (bpd) fall in Russian crude and product seaborne exports, the fifth largest disruption in a month since World War Two, the bank said in a note.
“As inventories are already at multi-year lows, we expect this to continue to exert upwards pressure on oil prices,” Morgan Stanley said in a note dated March 16.
The bank raised its Brent price forecasts to $120 and $110 a barrel for the last two quarters of the year respectively, up from the $100 previously estimated for both quarters.
Additionally, the 2023 crude oil forecast was revised to $100 per barrel from $95 previously. “We have lowered our production estimate for Russia by a million barrels a day (mb/d)- a fall from 11 mb/d to 10 mb/d from April onwards,” the bank added.
Brent crude futures were trading at $102.02 a barrel by 0926 GMT, after the International Energy Agency said 3 million barrels a day (bpd) of Russian oil and products could be shut in from next month.
But the bank also trimmed its 2022 oil demand growth forecast to 3.4 million barrels per day (bpd) from 4.0 million bpd previously due to a resurgence of COVID cases in key consumer China.
It also forecast 1 million bpd growth in supply from Iran in the second half of 2022 on a potential nuclear agreement that would release Iranian crude into the market.
But despite these risks to its forecast for higher prices, the bank kept its overall global demand estimate at an “above consensus” 2.5 million-3.0 million bpd, since inventory data suggests “that demand may already be running higher than most balances currently assume.”
Goldman raised its 2022 Brent spot price forecast to $135 per barrel from $98 and its 2023 outlook to $115 from $105.
In hiking the price forecasts, it said the world could be facing one of “largest energy supply shocks ever” because of the Ukraine crisis, while Barclays said prices in its worst case scenario could top $200 a barrel.
More than half of Russia’s March loadings so far were reported unsold and, if sustained, this could represent a 3 million barrel per day (bpd) fall in Russian crude and product seaborne exports, the fifth largest disruption in a month since World War Two, the bank said in a note.
The United States and Europe have not imposed sanctions on Russian oil and gas exports, but many buyers are reluctant to make purchases to avoid becoming entangled in sanctions indirectly, while Washington has said it could act alone in banning Russian oil imports.
Russia, the world’s second biggest oil exporter, ships about 7 million bpd of crude and oil products.
“In the short term, coping with such a supply shock would require the combined help of global strategic reserves, core-OPEC, Iran and higher prices to reduce consumption,” Goldman said.
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