BAKU, Azerbaijan, Apr.1. Oil demand destruction is expected to build, reflecting the direct impacts of the conflict in Ukraine, high energy prices and broader inflationary pressures, Trend reports with reference to Fitch Solutions.
“Brent crude prices have fallen this week, losing over 8 percent of their value to reach around USD109/bbl at the time of writing. Supply-side uncertainties remain extremely high. Western sanctions on Russia continue to evolve, while a growing number of countries are enacting oil import bans, most recently Poland.
In the near term, the resurgence of Covid-19 in China will also dent consumption and this has been among the key factors dragging prices lower in recent weeks. In the wake of Russia’s invasion of Ukraine, and in light of our expectations for far larger and more sustained export disruptions than we had previously anticipated, we have increased our annual average price forecast for Brent crude, from USD82/bbl to USD100/bbl,” said the company in its report.
The report says that exports are also facing further losses, due to operational disruptions related to the conflict, as well as the number of (largely Western) companies reducing trade with Russia.
“That said, we expect the volume of oil currently stranded in Russia to subside over time, as companies become better able to navigate sanctions and steep discounts on Russian export grades incentivize additional purchases in markets such as India and China,” said Fitch Solutions.
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