Market expects Brent price to stay below USD 100 per barrel this year - Bloomberg poll

The price of benchmark Brent crude will hover around USD 100 per barrel by the end of the year as high demand for the "black gold", caused by the war in Iran, gradually declines.

This is according to the results of a poll conducted by Bloomberg. It was attended by 126 asset managers and other energy market specialists.

Most market participants expect the average price of Brent crude to be between USD 81 and USD 100 per barrel over the next 12 months. Almost two-thirds of respondents are confident that oil will have a constant risk premium of between USD 5 and USD 15 per barrel in the coming years. Only a few expect it to exceed USD 20.

According to analysts, such poll results indicate that geopolitical risks are seen as permanent, but not as a factor capable of radically changing the long-term price regime. Respondents seem to assume that demand and supply will gradually come into balance.

The poll named "a decline in demand" as the most likely mechanism for compensating for the supply deficit over the next year. It is followed by the redirection of trade flows, adjustment of OPEC+ policies and the release of strategic reserves.

Bloomberg notes that the call option skew (when the volatility of call options is higher than that of put options) has decreased to the lowest level since the beginning of the Iran war. Hedge funds have also reduced bullish positions to the lowest level since that period.

This indicates that the market is focused not so much on chasing growth as on managing volatility. About a quarter of respondents expect increased hedging and risk management activities.

In addition, market participants expect that shale oil production in the United States will continue to grow, although they believe that the growth in production will be strong enough to significantly restore the balance in the market.

As Ukrainian News Agency reported, earlier today, May 21, oil prices showed a slight increase against the background of the risk of a breakdown of the peace agreement between the United States and Iran. The price of Brent rose to USD 106.2 per barrel, and WTI - to USD 99.5 per barrel.

As a reminder, due to the energy crisis that arose as a result of the war in Iran, the price of russian Urals oil jumped to a 13-year high.