BAKU, Azerbaijan, April 13. The growing risk of oil export disruptions driven by the war in Ukraine underpins bullish oil prices, which are set to dictate gasoline price levels in 2022, Trend reports with reference to Fitch Solutions.
“We have recently revised our Brent price forecast to USD100/bbl for 2022, from USD82/bbl expected in early March 2022. The key driver behind the elevated level of Brent prices is the growing risk of oil export disruptions as countries and companies pursue "self-sanctioning" of Russian products while the risk of official sanctions and/or physical flow disruptions loom over the market. As a result, we now expect Russia's oil production is set to decline by 9.2 percent y-o-y in 2022. As a result, we now expect a tighter oil market with a smaller supply-demand gap and thus more persistent upward price pressures,” reads the latest report released by Fitch Solutions.
The company believes that gasoline market is set to tighten over the near term on expected growth in demand further strengthened by the seasonal effect.
“In our core scenario of fighting in Ukraine continuing over
H222, reaching a stalemate by the year-end, we However, we point at
certain downside risks to gasoline demand, which could weaken the
price growth momentum, namely the zero-Covid policy in China and
accelerating demand destruction due to high retail gasoline prices.
First, we point to China, which continues to implement its zero
Covid-19 policy, resulting in wider
lockdowns and weakening fuel demand. Although China remains an
anomaly in this strategy, we see substantial downside risk to our
gasoline demand forecast stemming from the uncertainty of the
duration of restrictions imposed in the second-largest gasoline
consumer globally. Second, we are likely to see some demand
destruction driven by high gasoline prices over 2022. The demand
destruction has been difficult to gauge although we see some early
indications of it. In the US, for personal vehicles, the vehicle
miles travelled data indicate weakening gasoline demand in the US
over Q122,” Fitch Solutions says.
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