The biggest global oil crisis

Global oil prices have been climbing this year. The price of Brent surged almost 40% during 1Q 2022 as Russia-Ukraine war shocked global markets.

Analysts are expecting Brent to remain above USD 100 a barrel for the remainder of this calendar year as the spillover effects from the Ukraine conflict continue to weigh on an already tight market. 

In its latest forecast, Goldman Sachs lowered its Brent projections by USD 15 to USD 120 per barrel through 2H 2022 and currently expects prices to average USD 110 in 2023.

And oil markets could soon be heading towards a major supply crisis, says IEA. Sanctions imposed on Russia over the past several weeks could trigger the “biggest supply crisis in decades” for global energy markets, according to the International Energy Agency’s (IEA) March oil market report.

Russia is the largest oil and products exporter in the world, and sanctions are expected to push down Russia’s oil output by some 3 mn barrels per day this month as buyers shy away from the oil Moscow produces, the IEA said.

The International Energy Agency on Tuesday said it expected Russian oil output losses to average 1.5 million bpd in April, with losses growing to close to 3 million bpd from May.

Western sanctions against Russia and logistical constraints have hampered trade, people familiar with the data said on Tuesday.

OPEC has warned that it would be impossible to replace potential supply losses from Russia and signalled that it would not pump more crude.

The Organization of the Petroleum Exporting Countries on Tuesday cut its forecast for 2022 global oil demand growth, citing the impact of Russia-Ukraine war, rising inflation as crude prices soar and the resurgence of the omicron coronavirus variant in China.

OPEC now expects global demand to grow by 3.67 million bpd in 2022, down 480,000 bpd from its previous forecast.