BMI, a Fitch Solutions company, has revealed its latest Brent oil price forecasts out to 2028 in a new report sent to Rigzone recently.
According to the report, BMI sees the commodity averaging $85 per barrel in 2024, $82 per barrel in 2025, and $81 per barrel across 2026, 2027, and 2028. A Bloomberg Consensus included in the report projects that Brent will average $83 per barrel this year, $80 per barrel across 2025 and 2026, and $72 per barrel across 2027 and 2028. BMI is a contributor to the Bloomberg consensus, the report highlights.
In a previous report sent to Rigzone on February 6, BMI forecast that Brent would average $85 per barrel in 2024, $84 per barrel in 2025, and $81 per barrel across 2026, 2027, and 2028. A Bloomberg Consensus included in that report projected that Brent would average $83 per barrel in 2024, $80 per barrel in 2025 and 2026, $74 per barrel in 2027, and $88 per barrel in 2028.
“We are holding to our current forecast for Brent crude to average $85 per barrel in 2024, whilst downwardly revising our forecast for 2025, from $84 per barrel to $82 per barrel,” BMI analysts noted in the company’s latest report.
“Brent has performed well this month, breaking through near-term resistance to settle at a high of nearly $87 per barrel on March 25,” they added.
“Risk premia associated with the Russia-Ukraine war have resurfaced, with Kyiv ramping up its attacks on Russian energy infrastructure. This, combined with the ongoing supply risks in the Middle East and cutbacks by OPEC+, has fueled healthy price gains,” they continued.
In the report, the analysts noted that the macroeconomic backdrop remains somewhat challenging and added that global oil demand has come under downside pressure over recent quarters.
“However, there are signs that economic momentum has begun to build and this, combined with a gradually improving GDP growth outlook and expectations for interest rate cuts later this year has further supported price action,” they said.
“However, from 2025, our outlook changes from neutral-bullish to neutral-bearish, with market fundamentals set to loosen amid a wave of new supply from the Americas and the partial unwinding of the OPEC+ cuts,” they added.
“Demand growth will likely struggle to keep pace, due to lingering cyclical drags on consumption and accelerating demand destruction in developed markets,” they went on to state.
The BMI analysts stated in the report that OPEC+ has further reduced its output in the first quarter of 2024, “as additional voluntary cuts came into force in January”.
“Compliance remains widely varied across the group, with Iraq and Kazakhstan continuing to far exceed their allotted quotas,” the analysts said in the report.
“In contrast, Russia has reduced its seaborne exports by 3.1 percent in Q124 from Q423 and is likely to continue reducing crude production in line with OPEC+ guidance and recent government announcements,” they added.
“The current cuts are being held in place until June and we anticipate a gradual increase of supply over H224, accelerating into 2025. However, the pace at which the deal is unwound is the key ‘known unknown’ for our forecast next year,” they continued.
The BMI analysts highlighted in the report that the OPEC+ deal has now been in place for over seven years and pointed out that the OPEC-9 producers alone are producing more than five million barrels per day below their total capacity.
“Differing compliance levels are an ongoing source of friction and the UAE, which in relative terms has sacrificed by the far most to comply with the deal, may be showing some signs of fatigue with it,” they added.
“A surge of growth in non-OPEC supply over 2024 and 2025 will only add to this. Nevertheless, the group as a whole has repeatedly prioritized prices over production, and it is unlikely that it would risk destabilizing the market with a sharp, sudden or un-signposted increase in output,” they continued.
In a separate report sent to Rigzone on March 28, Bjarne Schieldrop, the Chief Commodities Analyst at Skandinaviska Enskilda Banken AB (SEB), said drone attacks on Russian refineries were “a catalyst to release Brent to higher levels”.
“Brent crude broke out to the upside on 13 March along with the Ukrainian drone attacks on Russian refineries. Some 800,000 barrels per day of refining capacity was hurt and probably went offline,” he added.
“But in the global scheme of things this is a mere one percent or so of total global refining capacity. And if we assume that it is offline for say three months, then it equates to maybe 0.25 percent impact on global refining activity in 2024, which is easy to adapt to,” he added.
Schieldrop predicted in the…
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