Middle East tensions to support Brent near $70 this year

Brent crude prices are likely to hold near $70 a barrel in the remainder of the year as elevated supply risks in the Middle East offset risks to demand from the US-China trade spat, a Reuters survey has showed.

A monthly survey of 43 economists and analysts forecast that Brent crude will average $68.84 per barrel in 2019, little changed from the previous poll’s $68.57 consensus but above the $66.80 average for the international benchmark so far this year.

“Geopolitical tensions in the Middle East are supporting the risk premium currently incorporated in crude prices, with disruptions to crucial trade routes being the most significant risk to global crude markets,” Intesa Sanpaolo analyst Daniela Corsini said.

Brent has slid to just below $65 a barrel last week, falling back to levels not seen since early March. It surged earlier this year to a near six-month peak of $75.60 in April, up about 50 percent from a near one-and-a-half year low hit in December.

Analysts polled expect global oil demand to grow by around 1.2–1.4 million barrels per day (mbd) in 2019, compared with the U.S. Energy Information Administration’s forecast earlier this month of 1.38 mpd.

They warned that oil prices are unlikely to rise to levels seen earlier this year, as any supply gap could be met by OPEC and abundant US oil output.