Analysts at the Bank of America have forecast that a collapse in oil production in Venezuela and potential export disruptions in Iran could push the price of Brent crude as high as $100-barrel in 2019.
The analysts said their target price for Brent, the global benchmark, was $90 for the second quarter of next year. But they warned there was a risk that deteriorating conditions in Iran would push prices to $100 – a level not seen since 2014.
US President Donald Trump’s decision to dump the Iran nuclear deal has already pushed Brent prices above $70-barrel. Prices have gained over 8% over the past month and 15% since the beginning of the year.
Investors are worried that renewed sanctions on Iran, a major oil producer, could lead to supply disruptions.
Another factor that’s helping to reduce supply is an agreement between OPEC and other major producers – including Russia – to slash output.
The deal is set to expire at the end of 2018, but the Bank of America analysts said that OPEC and Russia are likely to continue working together to prevent prices from falling.
At the same time, the analysts said the global economy is growing at a healthy pace and supporting higher demand for oil. The extra demand is helping to wipe out an oil glut that has plagued markets.
Meanwhile, the Bank has raised its average forecast for Brent crude to $70-barrel this year and $75 next year.
28 Jun 2018