The fog of war. It’s what Enverus Intelligence Research focused on this week in a report on the impact of the war in Ukraine on the world’s oil supply. As a result, it trimmed its prediction on growth.
In the report called”The Fog of War,” EIR assessed the outlook for oil supply amid sanctions on Russian energy and what that could mean for prices in the near term.
“With oil prices persistently high since Russia’s late February invasion of Ukraine, we have pared by more than 50% of our expectations for demand growth this year. We now expect global oil demand to grow about 1.5 MMbbl/d Y/Y in 2022, subject to further revision as GDP forecasts are adjusted lower,” said Bill Farren-Price, lead report author and director of Enverus Intelligence Research.
“Faced with technical challenges and potential reputational damage, European buyers are avoiding Russian cargoes, which were down by ~1.5 MMbbl/d in early March.”
Key takeaways from the report:
- EIR now project stock draws through 2022 until Q4, which is mostly in balance as demand growth eases, reflecting lower supply and easing demand as higher prices bite. Our Brent price forecast is now anchored above $100/bbl, reflecting tighter balances on the back of the Ukraine war.
- The March surge in Brent prices towards $140 brings a focus onto the risks to oil demand. EIR has halved its forecast for oil demand growth in 2022 and GDP downgrades will erode that view further in the coming month.