While the world’s giant economies are waiting for the danger of recession, the continued coronavirus restrictions in China have shaken the oil markets. Oil analysts then cut their oil price forecasts for the rest of this year. US-based Morgan Stanley and Switzerland-based UBS also cut their near-term forecasts for crude oil to $15 per barrel due to the worsening economic outlook and continued Russian oil supply.
It hit $120, then went down to $90
Brent crude had peaked above $120 in early March after Russia invaded Ukraine. Oil prices have lost nearly 30 percent since their peak during the year.
Experts expect oil to drop further in the next few months. However, it is stated that prices may increase again next year as economies recover and supply of Russian crude oil is restricted.
Highlights of the analyzes of the banks are as follows:
Morgan Stanley: Another $15 drop
The bank cut its short-term outlook for Brent oil due to the sharp slowdown in inflation and demand. It cut its price outlook by $12 a barrel for the third quarter to $98 a barrel and to $95 for the fourth quarter. It kept its quarterly forecasts for 2023 at $100 and above as it saw a tighter market from the second quarter. Russia’s oil exports are expected to fall significantly, with an estimated decline of 1.5 million to 2 million barrels per day through the beginning of 2023.
UBS: First it will drop, then it will go up to $125
The bank said it cut its year-end forecast for Brent to $110, down $15 a barrel due to lockdowns in China and Russia’s still-high exports. The restrictions in China will slow the recovery in demand in the short term, despite the increase in crude oil imports in August. With the end of strategic reserve sales and the shrinking market, Brent crude is expected to rise to $125 a barrel by the end of September 2023.
Goldman Sachs says it will ‘rise’
Analysts said in a note released Sept. 2 that the bank expects Brent to rise towards its 2023 forecast of $125 per barrel if a price cap is agreed on Russian oil exports. In such a scenario, Russian supply is likely to fall by 1 million barrels per day compared to pre-war levels.