Crude Oil : J.P.Morgan analysts stated in a note on Friday that Brent oil prices are unlikely to surpass the $100 a barrel level this year unless there are significant geopolitical drivers, with OPEC+ potentially adding supply and Russian flows recovering by mid-2023.
According to the note, OPEC+—an alliance that includes Russia and members of the Organization of Petroleum Exporting Countries (OPEC)—is unlikely to defend the $80 brent oil prices floor and would not require production quota cuts this year.
It also stated that the group could increase supply by 400,000 barrels per day (bpd). On Thursday, Saudi Energy Minister Prince Abdulaziz bin Salman stated that the current OPEC+ agreement to reduce production targets by 2 million barrels per day would remain in effect until the year’s end.
According to J.P.Morgan analysts, the supply-demand balance will likely tighten further as higher prices prevent the US from repurchasing to increase its strategic petroleum reserves and Russian output is anticipated to fully recover by June. On bets that tighter US monetary policy could dampen demand, Brent crude futures, the global benchmark, were down about $84 per barrel on Friday.
J.P. Morgan also maintained its estimate that China, the world’s largest importer, will increase its oil demand by 770,000 barrels per day. According to analysts, China is anticipated to import a record amount of crude in 2023 due to increased fuel demand, primarily as people travel more following the removal of COVID-19 curbs.
