Bank of America (BofA) analysts have highlighted recent developments in the energy sector, noting that unexpected US sanctions on Russian energy and cold winter weather have pushed the price of Brent oil back above $80 per barrel.
These factors, along with OPEC+’s disciplined production, have contributed to a sharp increase in Brent crude oil time spreads for the first to third months, now at $2.20 per barrel. Nevertheless, BofA warns of underlying weak fundamentals and potential headwinds from tariffs.
In the aftermath of the Russian invasion of Ukraine, global energy prices have seen fluctuations. Oil prices, which averaged $99 per barrel in 2022 and $82 in 2023, are expected to average around $80 per barrel in 2024, with a dip to a multi-year low of $69 per barrel in the second half of 2024 .
Recent sanctions and weather conditions have temporarily reversed the downward trend in prices, while oil inventories have shown a seasonal decline. BofA warned late last year of the significant upside risk to energy markets from policy measures.
The company forecasts that global trade will remain subdued, with further weakening expected as industry Purchasing Managers’ Indexes (PMIs) may decline. The United States’ plans to raise tariffs on China and other countries could worsen this trend in the first half of 2025. While China’s refining sector is increasing petrochemical inputs and air traffic growth is supporting demand for distillates, structural changes such as fuel substitution could dampen diesel demand.
The analysts also underlined that geopolitical events, including sanctions, tariffs and international relations, could have a profound impact on the balance between oil supply and demand over the next eighteen months. BofA’s baseline forecast suggests that gasoil Brent cracks will average about $14 per barrel in the second quarter of 2025.
However, they warn that recent sanctions on Russia and possible policy changes toward Venezuela and Iran by the new Trump administration could significantly change market projections and tighten global energy markets in the near term.
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