Goldman Raises Oil Price Target To $135

[dan_s]

"One Of The World's Largest Energy Supply Shocks Ever" : Goldman Raises Oil Price Target To $135
BY TYLER DURDEN
TUESDAY, MAR 08, 2022 - 08:28 AM
At a time when banks are rushing to outdo each other who can come up with the highest oil price forecast for 2022 (a welcome change from January when they did the same with the number of forecasted Fed rate hikes, and November when the "winner" was who can come up with the highest S&P price target), a few hours ago Goldman's commodities team took the lead, writing that as oil prices have surged to their highest level since 2008, "driven by the escalating military conflict in Ukraine and growing realization that imposed sanctions could meaningfully and sustainably reduce Russian exports, even with carve-outs for energy trade" the bank warns that given Russia’s key role in global energy supply, "the global economy could soon be faced with one of the largest energy supply shocks ever." (The full must-read report is available to pro subscribers).

According to Goldman, while the West will want to avoid such an outcome, global isolation could instead drive Russia to reduce its current account surplus and energy exports. While loading data remains volatile, reports point to more than half of March loadings remaining unsold, consistent with the exceptional discount of Russian export barrels relative to Brent. If sustained, this would represent a 3 mb/d decline in Russian crude and petroleum product seaborne exports, the fifth largest one-month disruption since WWII, after the Arab Oil Embargo (1973), the Iranian Revolution (1978), the Iran-Iraq war (1980), and the Iraq-Kuwait war (1990).

This disruption could further start impacting Kazakhstan piped barrels, which are typically commingled with Russian crude on the CPC pipeline. While the current sanctions have not been directly imposed on Russia’s oil sector, the intensification of the military conflict and the broader sanctions on Russia’s Central Bank are instead poised to significantly and sustainably reduce Russia’s own incentive to export energy.

See full article here:
https://www.zerohedge.com/markets/one-w ... target-135

OPEC+ and U.S. shale cannot replace the lost Russian oil. Old Joe's Team is clueless.

[dan_s]

"There is no capacity in the world that could replace 7 million barrels per day. We have no control over current events, geopolitics, and this is dictating the pace of the market." - OPEC Secretary General Mohammad Barkindo 3-7-2022 while in Houston for the CERA conference.

https://www.reuters.com/business/opec-m ... 022-03-08/

I see only two ways this ends:
1. The U.S. + NATO go to war with Russia to push them back into Russia. Lots more people die and Ukraine is turned into a wasteland. Lose/Lose.
2. We get a few adults in the room, tell Ukraine they are aren't going to win a war with Russia so they should give up. After that brief meeting, we tell Putin he can have Ukraine, but he needs to allow any Ukrainians that want to leave the country that they have freedom to leave or he rebuilds their homes. We will agree to drop all sanctions if Putin agrees that he stops at Ukraine.