Mar 25, 2024

Energy Analysts Expect Tightening Oil Markets and Rising Prices Amid Supply Risks

In a recent article discussing the growing crude oil supply risks in Q2 and Q3 on Oilprice.com, StoneX Energy Analyst Alex Hodes shared his outlook on the potential impacts of the ongoing conflict between Russia and Ukraine.

As oil prices have risen to multi-month highs, Hodes anticipates this trend to continue. Hodes expects that the attacks on Russian refineries could potentially cut global petroleum supplies by ~approximately 350,000L barrels-per-day (bbl/day), and which could boost oil prices by $3/bbl.

Other analysts have shared similar views. J.P. Morgan recently reported that the Ukrainian drone attacks have drastically impacted Russian refinery capacity, sending 900K barrels offline. They anticipate a risk premium of $4 a bbl to crude oil prices due to the added pressure to fuel markets.

ING Global also expects interest rate cuts by the Fed to increase speculative interest in oil futures, with long positions rising significantly compared to 2023. Positioning still remains modest compared to pre-2022 levels, possibly due to concerns about OPEC’s large spare capacity. Standard Chartered believes OPEC+ has room to increase Q3 output by as much as 1.5 million bbl/day Q/Q quarter over quarter without increasing inventories.

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