Citi Raises Oil Price Forecast Due to Concern About Possible Loss of Iran, Venezuela Supply

Citigroup analysts raised their forecast for oil prices for this year and next due to rising demand and the potential for supply losses from Venezuela and Iran. Even as they raised their target, the Citi analysts see lower prices for 2019 than 2018 because of more supply coming to the market. The analysts raised their 2018 forecast for Brent crude by $5 to $6 per barrel, to an average $65 per barrel, and they raised 2019 by the same amount, taking it to $55 per barrel. The strategists said they expected high volatility in oil prices to continue, due to push-pull of geopolitical and policy risks.   

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From John Kilduff, energy analyst at again capital: 

"As the inventory overhang drains, we're vulnerable to a super spike again," said Kilduff. "That would only be if there were losses of significant size in any major oil-producing countries, particularly in the Middle East."

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David Kelly, chief strategist at JPMorgan Asset Management thinks that oil prices at $70 may be the top of the range in the price of oil that we're going to see over the next few years. 

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and Daniel Yergin chiming in, of IHS Market: 

 

Screen Shot 2018-04-17 at 8.32.34 AM.png

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While markets have already priced in the risk of the U.S. not extending its waiver of sanctions on Iran come May 12, Scott Darling of JP Morgan thinks that the real issue is if Europe follows suit. 

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