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Oil rally to power on as sanctions on Russia throttle market -Breaking

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© Reuters. FILE PHOTO – A sticker reading crude oil is placed on the side a storage tank located in Mentone in Loving County in Texas. It was erected November 22, 2019. Picture taken November 22, 2019. REUTERS/Angus Mordant

By Seher Dareen

(Reuters). Reuters Poll: A rally which has driven oil prices up to record highs in the past decade does not seem to be slowing down as Russia’s top exporter is affected by sanctions following Ukraine’s invasion.

    A survey of 35 economists and analysts forecast would average around $91.15 a barrel this year, a jump from January’s $79.16 consensus and the highest 2022 estimate in all the Reuters surveys.

    was seen averaging $87.68 in 2022, versus January’s $76.23 consensus.

JP Morgan is one of the most optimistic predictions. It expects $185 oil to be available by 2022. This assumes there are no Russian import disruptions. The average year-to-date was $98.

Rabobank with $111.43, $110 and respectively Raiffeisen had the highest 2022 average forecasts.

    “The risk premium is going through the roof,” said Christian Reuter, NORD Landbk’s senior director of sector strategy, with the Organization of the Petroleum Exporting Countries and allies also unable to adequately compensate the shortfall.

    Benchmark Brent crude broke above the $100 last week for the first time since 2014 and hit $119.84 on Thursday. On Friday it traded above $112, supported by the sanctions on Russia (which ship more than 7,000,000 barrels per day)

Customers have resisted buying Russian oil to stay out of sanctions, even though the trade in oil and natural gas isn’t directly targeted. [O/R]

    “Prices could spike to $150 a barrel and even higher if the U.S. and allies take even more aggressive steps to reduce oil exports from Russia, as there is not sufficient spare capacity to offset a significant reduction in Russian exports,” said John Paisie, president of Stratas Advisors.

    An estimated 8% of global supply has been disrupted in recent days. Analysts believe that this shortage may not be compensated by either the International Energy Agency’s release of 60 million barrels emergency reserves, or an expected return to Iranian supply.

    The IEA release represented a “one-month offset to a potential disruption to one-third of Russia’s 6 million barrel per day seaborne oil export flows,” Goldman Sachs (NYSE:) said, adding a short-term de-escalation or a faster ramp up in OPEC+ output would not derail its view for structurally higher prices.nFWN2V417Q]

    DBS Bank lead energy analyst Suvro Sarkar said there could be “some normalisation in the second half of 2022, but maybe not to pre-conflict levels.”

    From an average forecast of $94.66 a barrel in the first quarter, Brent prices would rise to $97.07, before easing slightly to an average $87.08 in the last quarter and a relatively subdued $82.94 consensus next year, the poll showed.

    “The biggest downside risk stems from an economic slowdown that is the result of unintended consequences stemming from the sanctions and elevated energy prices — coupled with a global economy that is still dealing with supply chain issues,” Paisie from Stratas said.

Graphic: Oil price forecasts- https://fingfx.thomsonreuters.com/gfx/mkt/akpezxnjevr/OPOLLFeb.png

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