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Energy Update

Energy Update

OPEC+ to change tack from September

Whilst OPEC+ has been failing to meet its production quotas in recent months, it will technically finish unwinding its pandemic-related supply cuts come September. We think OPEC+ will then move to a more liberal approach and allow the few members with spare capacity to produce more. This is one reason why we forecast that the Brent oil price will ease back to around $100 per barrel by year end. In view of the wider interest, we are also sending this Energy Update to clients of our Middle East and North Africa service.

23 June 2022

Energy Update

Europe’s gas supply looking increasingly fragile

Russia’s decision to once again cut supplies to Europe makes the region’s gas supply look increasingly precarious. The move will slow regional stock builds and keep prices historically high.

16 June 2022

Energy Update

Freeport outage fuels already heightened supply fears

The closure of the Freeport LNG facility in the US, for up to six months, adds to concerns about Europe’s ability to fill its gas storage tanks ahead of winter. We always suspected that supply concerns would re-emerge this year and, as a result, we continue to forecast prices at around €120 per MWh at end-2022.

15 June 2022
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Energy Update

West’s detachment from Russian energy gathers pace

The EU’s sixth round of sanctions on Russia marks yet another defining moment in the West’s detachment from Russia’s energy trade. The sanctions were widely telegraphed in advance, though, so for now we still forecast that crude oil prices will remain high but slide towards $100 per barrel by year-end.

Energy Update

High fuel prices to suppress US oil consumption

We expect US fuel prices to remain historically high this year due to supply constraints. As a result, we suspect that oil consumption in the US will remain seasonably low for much of the rest of the year.

Energy Update

Gas supply to Europe to remain uncertain

News of force majeure on one of the pipelines in Ukraine bringing Russian natural gas to Europe just adds to our conviction that Europe is going to struggle to meet its gas needs over the next year. The heightened competition for gas imports suggests that prices will remain high at least until spring 2023. In view of the wider interest, we are also sending this Energy Update to clients of our Emerging Europe Service. Markets Drop-In (11th May, 10:00 EDT/15:00 BST): We’re discussing our Q2 Outlook reports and what they say about the potential performance of bonds, equities and FX rates as inflation peaks in a special 20-minute briefing on Wednesday. Register now.

Energy Update

EU oil embargo to hit Russia’s oil exports hard

The EU proposal to end imports of Russian crude oil and petroleum products by the end of the year has long been in the works. If approved, we expect Russia’s oil exports to fall by around 20% this year, which in turn would keep oil prices over $100 per barrel. But unless natural gas prices plunge and/or there are secondary sanctions on Russian oil, this won’t cause major pain for Russia’s economy immediately. In view of the wider interest, we are also sending this Energy Update to clients of our Emerging Europe Service.

Energy Update

Russia weaponisation of natural gas poses economic risks

Russia’s decision to suspend gas deliveries to Poland and Bulgaria from today because of a payments dispute will only strengthen the EU’s resolve to end its dependency on Russian gas, keeping gas prices historically high for months to come. The move also raises the risk of gas shortages in Poland and Bulgaria, especially Bulgaria which is relatively less well prepared. Euro-zone stagflation risks have risen, too. In view of the wider interest, we are also sending this Commodities Update to clients of our Energy, European Economics and Emerging Europe Economics Services .

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