Categories: Markets

BofA’s nightmare scenario for oil over $ 200

BofA’s nightmare scenario for oil over $ 200

World Bank chief Francisco Blanch expects oil prices to jump to $ 150 a barrel by summer, and does not rule out a possible “bad scenario” in which European countries could exceed $ 200 a barrel. impose sanctions on Russian crude.

In particular, speaking to Bloomberg Surveillance, the chief analyst at BofA said that “the crisis in Ukraine has raised overall oil price expectations by at least $ 25 to $ 30 a barrel, so in fact we now have a target of $ 150 in our baseline scenario.” “for the summer and at an average of $ 110 for the whole year.”

At this point, Mr Blanch warned that “this could only get worse”, adding that “the situation is already bad and Europe could choose to restrict oil purchases from Russia, so we will see significantly higher prices.” “.

“This is what we call the bad scenario, in which Russian supplies will be disrupted not only by one million or one and a half million barrels a day, but up to four million barrels a day,” he added.

According to the head of world commodities of Bank of America, this would mean that the price of crude will reach $ 200 a barrel or more.

As he explained, “the cessation of supply of one million barrels per day from Russia is equivalent to an increase of 20 to 25 dollars per barrel in its price, so if the size increases to two to four million barrels less, then we have to add 60 at $ 70 a barrel in our baseline scenario. ”

Finally, Mr. Blanch pointed out that diesel prices have already exceeded the highs of 2000 and 2008, recalling the wider impact this has on the world economy.

“Diesel is the basis of the economy, or the basis of everything we do from crop harvesting to industry, so the backbone of the economy is really strongly affected by these extremely high prices,” he said.

Source: Capital