Brent Crude prices are set to average just over $107 per barrel in the second quarter, the latest Reuters poll of analysts showed on Tuesday, but some experts expect the partial EU ban on Russian imports to send oil prices to above $130 a barrel in the short term.
“We believe once the fine print of the EU ban becomes clearer in coming days, as to the timing and full extent of the ban, we could see oil prices move beyond $130 per barrel,” DBS Bank lead energy analyst Suvro Sarkar told Reuters in the monthly survey of 33 analysts and economists.
The EU agreed late on Monday to impose by the end of the year a ban on seaborne Russian oil imports, exempting—for now—pipeline oil supply via the Druzhba pipeline to Hungary, the Czech Republic, and Slovakia.
The sixth package of EU sanctions against Russia will immediately impact 75% of Russian oil imports, and by the end of the year, 90% of the Russian oil imported in Europe will be banned, Charles Michel, President of the European Council, said.
As a result of the ban, the global market will see further constraints in supply, which are set to support oil prices, analysts say.
For the full year, the analysts in the Reuters poll expect Brent Crude prices to average $101.89 a barrel, up from the $100.16 consensus forecast in the April poll.
Early on Tuesday, Brent Crude was up 1.5% at $123.45 per barrel, following the news of the EU embargo, the low fuel inventories in the United States, lower global refinery capacity than before COVID, and a tentative reopening in the Chinese city of Shanghai after two months of lockdowns.
“A gradual ban on Russian oil means that the strength in the market shouldn’t be as abrupt as it could have been had we seen an immediate ban. Instead, we expect prices to trend higher through the course of the year,” Warren Patterson, Head of Commodities Strategy at ING, said on Tuesday.
ING expects Brent Crude to average $110 per barrel this quarter, $118 in the third quarter, and $125 in the fourth quarter. WTI Crude forecasts are for $107 a barrel average price for Q2, $115 in Q3, and $122 in Q4.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.