BoA "International oil prices to reach $95 this summer"

Geopolitical Tensions Rise and Supply Suppression Impact

Geopolitical tensions and supply shortages have led to forecasts that international oil prices could soar to as high as $95 per barrel this year.

Bank of America (BoA) Research on the 3rd (local time) raised its price outlook for Brent crude and West Texas Intermediate (WTI) crude oil this year, citing escalating geopolitical tensions and supply restrictions by the Organization of the Petroleum Exporting Countries (OPEC)+ oil-producing countries.

[Image source=Reuters Yonhap News]

BoA expects the average price of Brent crude and WTI crude oil to reach $86 and $81 per barrel, respectively, this year. It also anticipates that both Brent and WTI crude prices will surge to around $95 per barrel during the summer.

This is due to increased demand driven by global economic growth amid geopolitical tensions and limited supply. BoA stated, "With improved economic growth forecasts, the global oil market is estimated to experience a daily deficit of up to 450,000 barrels in the second and third quarters of this year," adding, "Geopolitical disruptions have lengthened crude oil trade routes, increasing demand, and attacks on Russian energy infrastructure have reduced refining capacity, impacting supply."

On the 2nd, Ukrainian drones attacked a Russian refinery. This refinery is the third largest in Russia, processing about 155,000 barrels of crude oil per day.

In the Middle East, tensions between Israel and Iran have deepened after Israel attacked the Iranian consulate in Damascus, Syria. There are growing concerns that the conflict could escalate across the broader Middle East region.

OPEC+, composed of OPEC member countries and non-OPEC oil-producing countries, decided at a meeting on the same day to voluntarily cut oil production by 2.2 million barrels per day until the second quarter.

On the day, June delivery Brent crude closed at $89.35 per barrel, up 43 cents (0.5%) from the previous trading day. During intraday trading, it rose as high as $89.99 per barrel, nearly breaking the $90 mark. May delivery WTI closed at $85.43 per barrel, up 28 cents (0.3%). It rose for the fourth consecutive trading day, reaching its highest level in five months since October 27 of last year.