Baku, Azerbaijan, April 25
By Leman Zeynalova – Trend:
UK-based Capital Economics research and consulting company has revised its forecasts for Brent prices from $50 per barrel to $60 per barrel as of late 2019, Trend reports citing the company.
“While we still think that this year’s rise in oil prices will soon go into reverse, we have bumped up our end-year forecast. The now smaller drop in oil prices we’re expecting doesn’t change the picture much at the global level, but at the margin it is another reason to think that global growth will remain subdued,” said the company.
The price of Brent crude has risen by about 40 percent since the start of the year, from $53 to $74 per barrel, mainly due to supply disruptions, according to the estimates of Capital Economics.
“The price has jumped in recent days following the US decision to toughen its sanctions on Iran by withdrawing the waivers it granted to the largest importers of Iranian oil. Reflecting this, we have revised up our end-year forecast for Brent crude from $50 to $60 per barrel. Note, though, we still expect oil prices to fall this year as sluggish global growth weighs on oil demand, US shale output grows strongly and investor aversion to risk assets like commodities increases,” said the company.
Of course, Capital Economics believes there is now plenty of spare capacity to cover any further loss of Iranian barrels.
“Saudi Arabia produced around 0.45 million barrels per day (bpd) fewer than its quota in March and nearly 2m bpd fewer than (a conservative) estimate of its available capacity. What’s more, the Kingdom has always pledged to offset sanctions-induced cuts to Iranian oil production as it supports the US policy stance on Iran. And we expect growth in US output to pick up from here, incentivised by current, relatively high prices,” said the company.
Aside from lower Iranian oil output, there now appears little prospect of a rebound in Venezuela’s output this year and there are heightened risks to supply from Libya, Algeria and Nigeria, according to Capital Economics. “As such, we have cut our estimate of global supply in 2019 to 100m bpd, lower than the 101.5 bpd projected by the EIA.”
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