66% of Russian oil is struggling to find buyers currently
Oil prices have surged above $110 as buyers shun Russia output
Brent crude could end the year at $185 a barrel if Russian supply continues to be disrupted, JPMorgan Chase & Co. wrote in a note Thursday.
Oil prices have skyrocketed, with Brent crude approaching $120 earlier Thursday as traders shun Russian oil after Moscow invaded Ukraine. U.S. President Joe Biden is facing calls to ban Russian imports of energy but so far has not imposed full blown sanctions on oil.
Currently, 66% of Russian oil is struggling to find buyers, JP Morgan analysts including Natasha Kaneva said in the note.
In the short term, the scale of the supply shock is so large that oil prices need to reach and stay at $120 a barrel for months to incentivize demand destruction, the analysts said, assuming there would be no immediate return of Iranian crude barrels.
“As sanctions have widened and the shift to energy security takes on an urgent priority, there will likely be ramifications for Russian oil sales into Europe and the US, potentially impacting up to 4.3 million barrels per day,” the analysts wrote.
The bank maintained its price forecast, which calls for Brent to average $110 a barrel in the second quarter, $100 in the third quarter and $90 in the fourth quarter. Without a return of Iranian barrels to the market, the bank expects oil prices to average $115 in the second quarter, $105 in the third quarter and $95 by the fourth quarter.
Stuart Turley is President and CEO of Sandstone Group, a top energy data, and finance consultancy working with companies all throughout the energy value chain. Sandstone helps both small and large-cap energy companies to develop customized applications and manage data workflows/integration throughout the entire business. With experience in implementing enterprise networks, supercomputers, and cellular tower solutions, Sandstone has become a trusted source and advisor in this space. Stuart has led the “Total Corporate Digital Integration” platform at Sandstone and works with Sandstone clients to help integrate all aspects of modern digital business. He is also the Executive Publisher of www.energynewsbeat.com, the best source for 24/7 energy news coverage and is the Co-Host of the energy news video and Podcast Energy News Beat.
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