By Adedapo Adesanya
British financial institution, Barclays, on Monday raised its Brent crude price forecasts by $11 to $111 per barrel for 2022, citing a larger and sustained disruption in Russian supply following sanctions by the European Union (EU).
It also increased the price benchmark for the year 2023 by $23 per barrel as it sees Brent prices averaging $111 this year and next, while it sees US West Texas Intermediate (WTI) at $108 for the same period.
Russian oil output is expected to decline by 1.5 million barrels per day by the end of the year, Barclays said, adding it no longer expects inventories to normalise over the forecast period.
“Limited spare capacity and constrained U.S. supply growth, mean inventories are likely to remain tight over our forecast horizon, barring a significant slowdown in demand due to spillover effects,” the bank said in a note.
Business Post had reported that the leaders of the EU last week agreed to cut oil imports from Russia by 90 per cent by the end of the year.
The sanctions will also bar operators within the EU from financing or insuring transportation of Russian oil to third-party countries.
“This will make it particularly difficult for Russia to continue exporting its crude oil and petroleum products to the rest of the world since EU operators are important providers of such services,” the European Council said in a statement.
European Council President Ursula von der Leyen proposed the ban in May after the US, which is less reliant on Russian oil, had announced a similar embargo.
Europe is the destination for nearly half of Russia’s crude and petroleum product exports before Russia’s invasion of Ukraine, according to the International Energy Agency (IEA).
Citi Research on Monday also raised its quarterly oil price forecasts for this year and its year-average outlook for 2023, noting any additional supply from Iran looked heavily delayed.
Citing tighter market balances, Citi raised its second-quarter 2022 Brent price forecast by $14 to $113 per barrel, and the third and fourth quarter prices by $12, to $99 and $85, respectively.
The bank estimates Brent to average $75 per barrel in 2023, revised higher by $16.
