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Tsvetana Paraskova

Tsvetana Paraskova

Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. 

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Oil Prices Could Soon Break $100 As Upside Risk Grows

  • Economic headwinds and weak demand from China due to Covid lockdowns have weighed on oil prices in recent months.
  • Sanctions on Russian oil, the OPEC+ supply cut, and the possibility of China opening up mean that the risk to oil prices is now to the upside.
  • There is further upside risk for oil due to potential supply disruptions in Russia, Libya, Iraq, and Iran.
Oil prices

Despite global economic headwinds, oil prices could soon return to above $100 per barrel again, sooner than analysts thought two months ago.

While slowing economies and fears of recession have weighed on oil prices for months, the OPEC+ cuts as of this month and the EU embargo on imports of Russian crude by sea from next month—and of Russian oil products from February 2023—could overtighten the market and send oil above $100 a barrel again.

China’s Covid policy and its possible easing at some point next year will also be closely watched by the oil and other commodity markets for signs of a coming uptick in commodity demand if and when Chinese authorities relax the strict Covid rules.

Currently, China’s snap lockdowns and slowing economies are the bearish factors dominating the oil market. But the bullish factors could take the upper hand in the near term, sending oil prices to triple digits again, analysts say.

The OPEC+ decision to cut the headline production target by 2 million barrels per day (bpd) as of November did stabilize the oil market, as OPEC+ claims its goal is. Brent prices stabilized at above $90. The risks from here are more to the upside than to the downside, despite aggressive interest rate hikes to fight inflation, commodity analysts say.   

“The oil markets are more vulnerable for a $10 move higher than lower,” Ole Hansen, Head of Commodity Strategy at Saxo Bank, said on a Gulf Intelligence webinar earlier this week. Talking about a $10 move in oil prices, the risk is still to the upside, Hansen added, citing the first signs of a potential Chinese easing in Covid sometime next year, the OPEC+ cuts, and the EU sanctions on Russian oil.  

The market is tight, and some crack spreads around the world are still very elevated, Hansen noted.  

Helge Andre Martinsen, a senior analyst at DNB Bank, told Bloomberg, “I think OPEC+ is super-happy with stabilizing Brent in the US$90s.” Yet, “there is a real risk of over-tightening in the next three-to-five months,” Martinsen added.

Brent Crude could spike to $125 a barrel next year if China eases its Covid policies, Goldman Sachs said in a note on Monday, carried by Business Insider. Goldman’s current forecast for Brent for 2023 is at $110, but there is a lot of upside risk due to possible supply disruptions in Russia, Libya, Iraq, and Iran.

“The risk distributions around our current oil forecasts are skewed squarely higher given spot demand continues to realize robustly,” the bank’s analysts said.

Just after the OPEC+ decision to cut supply, another bank, Morgan Stanley, said in early October that oil prices would rise again to $100 per barrel faster than previously estimated, and lifted its price forecast for the first quarter of 2023 to $100 from $95 per barrel.

Brent prices could easily break above $100 per barrel again if losses of supply from Russia are close to 3 million bpd when the EU embargo on Russian crude imports by sea enters into force next month, the Riyadh-based International Energy Forum (IEF) thinks. According to the IEF, the world’s largest international organization of energy ministers, the oil market could lose anywhere between 1 million bpd and 3 million bpd of oil supply from Russia when the sanctions take effect.

“Speculators appear to be getting increasingly constructive on the oil market likely due to the expectation that the market will tighten due to a combination of the EU ban on Russian oil soon coming into effect as well as OPEC+ supply cuts,” ING strategists said earlier this week. 

According to Warren Patterson, Head of Commodities Strategy at ING, the OPEC+ cuts have changed the bank’s outlook for oil in 2023 from a previously expected surplus through the middle of 2023 to a deficit throughout the whole year. The relief for the energy markets will not last long, Patterson said in an analysis last week, adding that ING currently assumes that with the EU embargoes on Russian crude and products, supply out of Russia would drop by a little more than 2 million bpd in the first quarter of 2023.  


Despite the economic headwinds globally, the risk to oil prices in the coming weeks and months is more to the upside than to the downside due to a combination of two major bullish factors - the OPEC+ cuts and the EU embargo on Russian oil imports by sea.

By Tsvetana Paraskova for Oilprice.com

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  • Mamdouh Salameh on November 09 2022 said:
    The strong fundamentals of the global oil market suggest that crude oil prices will soon be trending upward with Brent crude oil price probably rising to $100-$110 a barrel before the end of 2022.

    Moreover, the market is signalling that the OPEC+ cut has, as intended, stabilized the market and prices around the $90s. And yet, the hapless IEA and its director Fatih Birol are calling on OPEC+ to reconsider its cut.

    Prices will be further strengthened by reports that China is considering easing its strict zero-COVID policies, the EU embargoing Russian crude oil exports from 5 December, the G7 and the EU capping the price of Russian crude exports and Russia threatening to halt immediately its oil exports to countries implementing the cap.

    Dr Mamdouh G Salameh
    International Oil Economist
    Global Energy Expert

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