Egypt turmoil pushes Brent to four-month high
Brent oil prices reached four-month highs in mid-August as civil unrest in Egypt fuelled supply disruption concerns
On 14 August, Brent hit $111 a barrel (/b) after more than 500 people were killed in clashes between the Egyptian army and protesters. Brent prices, which have also been supported by supply outages in Libya and Iraq, have risen by around 9% since former Egyptian president Mohammed Morsi was ousted from power on 3 July.
WTI futures, meanwhile, hit 16-month highs as higher US refining runs and crude draws bolstered the West Texas benchmark. WTI futures reached $108/b on 19 July – the highest level since March 2012.
On 19 August, Goldman Sachs raised its short-term Brent price forecasts because of recent supply disruptions in Libya and Iraq. The bank increased its three-month price forecast to $110/b and its six-month estimate to $108/b. It previously forecast a Brent price of $105/b for both time frames. However, Goldman Sachs kept its 12-month oil price forecast unchanged at $105/b on expectations of increased production in 2014.
Brent and WTI were trading around $110/b and $106/b, respectively, on 20 August. Prices for both benchmarks had been depressed by fears the US could pull back its quantitative easing programme, a move which could cut US crude demand.
The IEA said global oil demand growth is expected to increase by 1.1 million b/d next year. This is up from year-on-year demand growth of around 900,000 b/d in 2013. This 2014 demand-growth forecast is around 100,000 b/d lower than previously estimated. The 2013 growth forecast has also been trimmed by 30,000 b/d, to 895,000 b/d.
The IEA said it had cut estimates because of weaker macroeconomic forecasts. In July, the International Monetary Fund lowered its estimate of global economic growth this year to 3.1%, down from a previous forecast of 3.3% in April.