The benchmark Brent oil contract could rise between US$5 and US$20 a barrel depending on the severity of the crisis between Russia and Ukraine, said Bank of America (BofA) Global Research, which on the other hand maintained that prices could fall between $2 and $4 if tensions ease.
Oil hit its highest level since 2014 on Tuesday, with Brent futures hitting $99.50 a barrel after the Russian government of Vladimir Putin ordered troops into two breakaway regions of eastern Ukraine.
The bank sees Brent heading for $120 a barrel by mid-2022, with fundamentals warranting a near-term spike and demand projected to rise by 3.6 million barrels per day (bpd) to exceed pre-pandemic levels. by nearly 101 million bpd this year.
“A weakening dollar trend and a growth-friendly macroeconomic backdrop, if it comes at all, could support crude near triple digits in the second half of the year,” the bank said in a research note.
A possible nuclear deal with Iran and subsequent sanctions relief would quickly translate into lower oil prices, analysts at the bank said.
BofA analysts believe that Brent prices will need to average $60 to $80 a barrel to keep the global oil market in balance through 2027.
Source: Gestion
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