BAKU, Azerbaijan, April 2. Fitch Solutions has made a large upward revision to its Brent crude price forecast this quarter, Trend reports with reference to the company.
“We now expect prices to average at USD100/bbl in 2022 and USD90/bbl in 2023, up from USD82/bbl and USD83/bbl previously. While sanctions have largely shied away from oil and gas trade, as we had anticipated, export disruptions look to be more substantial and more sustained than we had previously forecast, not least due to ‘self-sanctioning’ by major Western oil companies, under pressure to disengage from Moscow. As a result, we decreased our Russian oil production forecast this month, impacting global supply. We now expect output to contract by 983,000b/d y-o-y in 2022, compared to the 692,000b/d growth we had forecast previously. This has largely erased the global surplus we had expected to emerge this year, signalling a tighter market balance and more persistent upward price pressures,” reads the latest report released by Fitch Solutions.
The company notes that the risks to the outlook remain extremely elevated, but are now more evenly weighted between the upside and down.
“Sanctions are still unfolding and the scale and duration of future Russian export losses is far from certain. Neither is the demand-side response to higher prices, nor the capacity of non-OPEC+ producers and coordinated storage releases to plug the deficit. In the intervening period, prices – which have swung between USD100-USD140 over the past month – are likely to remain extremely volatile, amid elevated uncertainty and rapid news flow. Moreover, large and frequent price swings are creating challenging conditions in which to trade, with open interest in Brent slumping to its lowest levels in seven years. Current speculative positioning points to a high degree of uncertainty in the market, while weaker liquidity will only exacerbate the volatility in the near term,” the report says.