Deutsche Bank on Wednesday indicated Brent crude prices could potentially rise to $87-$90 per barrel (bbl) if Russian oil production is disrupted by 1 million barrels per day (mmb/d) over Q2 to Q4, potentially inflating oil prices.
However, the German bank noted this scenario could also prompt the Organization of the Petroleum Exporting Countries and allies including Russia (OPEC+) to accelerate planned supply increases, which would require concessions to Russian officials, thereby limiting the oil price increase.
The U.S. Treasury on Friday announced sweeping new sanctions against the Russian energy sector, including oil majors Gazprom Neft SIBN and Surgutneftegaz SNGS, to try to hinder Moscow in its war with Ukraine.
Last week, Deutsche Bank revised its average Brent forecast for 2025 from $66/bbl to $72/bbl, citing the December OPEC+ decision as well as signals from Shandong Port Authority that they would begin to restrict U.S.-sanctioned vessels from docking and unloading.
China’s Shandong Port Group issued a notice on Jan. 6 banning U.S. sanctioned oil vessels from its network of ports, according to three traders, potentially restricting blacklisted vessels from the network of major terminals on China’s east coast.
“Though the extent of the sanctions is surprising, the U.S. Treasury Department has left room to tighten further if U.S.-Russia negotiations hit a snag after President-elect Donald Trump’s inauguration,” Deutsche Bank said.
The bank also expressed doubt over the eventual supply impact of the sanctions and highlighted questions regarding the U.S. presidential transition and the use of sanctions as a negotiation tool.
“This leaves open the possibility that President-elect Trump and Russian President Vladimir Putin may come to an agreement whereby sanctions are rolled back in exchange for concessions related to an armistice in Ukraine, potentially before the wind-down period concludes,” the bank said.
Meanwhile, Deutsche Bank DBK anticipates the OPEC+ supply schedule to proceed earlier than expected due to potential sanctions cooperation from Indian refiners and Shandong port operators.
Source: Reuters