Baku, Azerbaijan, Sept.17
By Leman Zeynalova – Trend:
Brent prices are expected to average at $75 per barrel and $82 per barrel for 2018 and 2019, respectively, Fitch Solutions (part of Fitch Group) said in its report obtained by Trend.
“We expect global spare capacity will continue to shrink over the coming months in the wake of losses from Iran, Venezuela and Angola. This will be partially offset by the return of OPEC+ and US barrels,” said the report.
The company believes that the key risks to its oil price outlook are as follows: rising global trade protectionism; strengthening US dollar; slowing emerging market (EM) demand.
“Brent has already faced downside pressure as a result of weakening market sentiment, spurred by rising global trade tensions. Though front-month prices have largely recovered their losses in recent weeks, prices remain below the July peak of $78.86,” said the report.
Moreover, Fitch Solutions believes that there is considerable threat of additional tariffs.
“The US President Trump has threatened to impose tariffs on all Chinese imports, totaling $505 billion. Given the importance of US-China trade to the global economy, an escalation of the trade dispute could materially disrupt, or possibly sever, supply chains, resulting in reduced production efficiency, higher costs and lost competitiveness,” said the report.
“This would have a negative impact on demand, potentially accelerating a seasonal decline in consumption as we enter the post-summer season. Though our forecast accounts for seasonal shifts in demand, an escalation in the US-China trade dispute could impact a larger percentage of consumers to a greater degree, posing further downside pressure on Brent.”
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