Revising up our oil price call – maximum pain in Q3-22 with Brent above USD140/b: The MUFG Global Markets Podcast

Russia’s invasion of Ukraine has introduced a risk premium in oil prices that is likely to remain embedded in markets for months.

Ehsan Khoman, Head of Emerging Markets Research (EMEA), believes that barring a breakthrough in peace negotiations, the price-induced demand destruction – the only practical mechanism currently available in a world devoid of inventory buffers and supply elasticity – necessary to reduce consumption is set to become widespread by the third quarter, with a corresponding Brent crude oil price above USD140 per barrel. He believes this is the maximum pain level that could jolt corporate activity, squeeze private consumption and ultimately begin to ease the market’s severe tightness.

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