Goldman Sachs hiked its price forecasts for Brent oil saying 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/bbl.
Oslo-based consultancy Rystad Energy also said Brent could rise to $200 if Europe and the U.S. banned Russian oil imports.
Goldman raised its 2022 Brent spot price forecast to $135/bbl from $98 and its 2023 outlook to $115 from $105.
More than half of Russia’s March loadings so far were reported unsold and, if sustained, this could represent a 3 million bbl/d 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.
Russia, the world’s second biggest oil exporter, ships about 7 million bbl/d of crude and oil products.
The U.S. on March 8 banned Russian oil imports in retaliation to Moscow’s invasion of Ukraine, a decision that is expected to worsen disruptions in the global energy market. Europe has not imposed sanctions on Russian oil and gas exports yet, but many buyers are reluctant to make purchases to avoid becoming entangled in sanctions indirectly.
Shell, among others, said on March 8 that it would no longer buy Russian crude oil and would phase out its involvement in all Russian hydrocarbons.
“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.
Barclays 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.”
Oil prices climbed above $130 on March 8 on prior to the U.S. would formally announcing its ban on Russian oil imports. Brent crude futures settled on March 8 at $127.98/bbl, 3.9% higher, while WTI crude futures in the U.S. settled at $123.70/bbl, a 3.60% increase.
Hart Energy staff contributed to this report.
Recommended Reading
Oil Broadly Steady After Surprise US Crude Stock Drop
2024-03-21 - Stockpiles unexpectedly declined by 2 MMbbl to 445 MMbbl in the week ended March 15, as exports rose and refiners continued to increase activity.
Russia Orders Companies to Cut Oil Output to Meet OPEC+ Target
2024-03-25 - Russia plans to gradually ease the export cuts and focus on only reducing output.
Oil Rises After OPEC+ Extends Output Cuts
2024-03-04 - Rising geopolitical tensions due to the Israel-Hamas conflict and Houthi attacks on Red Sea shipping have supported oil prices in 2024, although concern about economic growth has weighed.
Oil Prices Edge Lower on False Report of Israeli Ceasefire, Sustained OPEC Cuts
2024-02-01 - Oil prices fell 2% on the false speculation that Israel and Hamas had tenatively agreed to a ceasefire, but losses were subsequently pared.
Global Oil Demand to Grow by 1.9 MMbbl/d in 2024, Says Wood Mac
2024-02-29 - Oil prices have found support this year from rising geopolitical tensions including attacks by the Iran-aligned Houthi group on Red Sea shipping.