Oil boom likely to continue following Russia sanctions, experts say

A rally that has pushed oil prices to their highest level in nearly a decade shows no sign of slowing as supplies from major exporter Russia are disrupted by sanctions following the invasion of Ukraine, a Reuters poll showed on Friday. (4).

The survey of 35 economists and analysts predicted that Brent crude would average about $91.15 a barrel this year, a jump from the consensus of $79.16 in January, and the highest estimate for 2022. in all Reuters polls.

U.S. crude is estimated to average $87.68 in 2022, up from a consensus of $76.23 in January.

Among the more “bullish” forecasts, JP Morgan expects oil at $185 by the end of 2022 if the disruption to Russian exports lasts that long, although its average for the year was $98.

The highest average forecasts for 2022 were from Rabobank and Raiffeisen, at $111.43 and $110, respectively.

“The risk premium is increasing,” said Christian Reuter, senior director of sector strategy at NORD Landbk, with the Organization of Petroleum Exporting Countries and allies also unable to adequately compensate for the shortfall.

Benchmark Brent crude surpassed $100 last week for the first time since 2014 and hit $119.84 on Thursday.

A barrel was trading above $112 on Friday, supported by sanctions on Russia, which typically exports more than 7 million barrels per day (bpd).

While the oil and gas trade is not a direct target, customers have been hesitant to buy Russian oil to avoid getting involved in sanctions.

“Prices could rise to $150 a barrel and even higher if the US and allies take even more aggressive steps to reduce Russian oil exports as there is not enough idle capacity to offset a significant reduction in Russian exports.” said John Paisie, president of Advisor Stratas.

An estimated 8% of global supply has been interrupted in recent days. The shortfall may not be offset by the International Energy Agency’s decision to release 60 million barrels of emergency reserves or a likely return of Iranian supplies, analysts said.

The IEA’s clearance represented a “one-month compensation for a potential disruption of a third of Russia’s 6 million barrels a day oil export flows,” Goldman Sachs said.

Source: CNN Brasil

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