Barclays and Citi Raise Crude Price Forecast

Barclays and Citi raise 2022 and 2023 price forecasts on tight supply-demand balance.

• Barclays raised crude price forecast by 11$/bbl for 2022 and by 23$/bbl for 2023 on Russian supply disruption following EU sanctions. Brent 2022 price is forecast at 111$/bbl and WTI at 108$/bbl.
• Russian oil output is expected to decline by 1.5mbpd by the end of the year. They no longer expect inventories to normalise over the forecast period due to limited spare capacity and constrained US supply growth.
• Citi raised Q222 Brent by 14$/bbl to 113$/bbl and raised Q3 and Q4 by 12$ to 99$/bbl and $85$/bbl. 2023 is forecast to increase by 16$/bbl to 75$/bbl.
• They see a “downward trend to prices after a spiky near-term period, on progressively loosening supply-demand balances.” They expect Russian production to fall between 1 and 1.5mbpd and see weaker demand growth from economic headwinds, Chinese lockdowns and high prices.
• The price increase comes from a tighter balance due to delayed Iranian supply with talks on reviving the 2015 nuclear agreement making little progress. The previous forecast expected an easing of Iranian sanctions leading to higher output in mid22 but now expects additional supplies starting in 2023. They forecast 0.5mbpd additional barrels from Iran in 1H23 and 1.3mbpd in 2H23.