Bank of America forecasts that Brentcrude will trade above $100 a barrel in 2023.- Both a deepening
recession or a ceasefire in Ukraine, however, could cause crude prices to drop.
Analysts at Bank of America expect
The bank's $100-a-barrel forecast for next year comes as recession fears have already weighed on crude oil prices. But Brent crude has fallen from roughly $125 a barrel in June to a recent low of $94.50 a barrel thanks to seasonal factors, as well as easing US-Saudi relations.
They added that fuel risks in Europe with oil, coal, and gas will remain for the foreseeable future, however, and warp the global energy map.
But prices could sink below the
"Global oil demand has historically fallen on average by 640k b/d during IMF world recessions (1975, 1982, 1991, 2008), and it did contract by much more during 1980-81 and 2009," BofA analysts wrote in a Friday note.
Analysts added that the current downturn is different from the past due to the strained supply and demand dynamics.
"The difference now compared to previous recessionary environments is that the pullback in demand has been essentially triggered by a supply shortfall," BofA said. "In turn, the adjustment mechanism to bring scarce available molecules into balance with demand has been higher prices."
But if Russia halts its invasion of Ukraine or eases hostilities, oil prices could see some relief.
According to the BofA: "Energy supply chains have lengthened in recent months and sanctions relief on Russian oil could reverse some of these flows, potentially releasing up to 100 million barrels of oil into the market."