The price of the global benchmark Brent crude could rise past $150 a barrel if there is a sharp contraction in Russian oil exports, Bank of America (BofA) Global Research said on Friday.
Oil prices surged after Russia’s invasion of Ukraine in late February and are currently just below $120 a barrel.
“With our $120 Brent target now in sight, we believe that a sharp contraction in Russian oil exports could ... push Brent well past $150,” the bank’s analysts wrote this week.
The European Commission has proposed an oil embargo on Russia, though talks have failed to produce a breakthrough so far, with Hungary vetoing the move.
BofA forecasts Brent prices averaging $104.48 a barrel for all of 2022 and $100 next year.
The analysts do not forecast a recovery in oil demand to pre-Covid levels this year because supply issues persist.
“A supply-led $30 increase in oil prices this year shaved 1.5 million barrels per day off demand, preventing a recovery to pre-Covid levels,” the bank’s analysts said.
Global oil demand in 2019, before the pandemic, averaged just under 100 million barrels per day.
The analysts also said that oil demand could approach pre-pandemic levels next year if Russian liquids (oil) production holds near 10 million bpd and supplies from the Opec+ alliance, which includes Russia, increase.
Oil prices were on track for weekly gains on Friday, supported by a prospect of a tight market due to rising gasoline consumption in the United States as the summer driving season starts, and the possibility of the EU ban on Russian oil.