Name: Oil Hits Highest Level Since October, What's Next? | Bjarne Schieldrop
Uploaded: 2025-01-12T02:16:11+00:00
Duration: 1539 s

Speakers

Bjarne Schieldrop — Chief Commodities Analyst at SEB

Summary

Bjarne Schieldrop, Chief Commodities Analyst at SEB, reviews the recent oil rally and explains why Brent crude may average $75/bbl in 2025 with a wide high-$50s-to-$90 range. He sees a tight physical market but OPEC+ spare capacity capping upside, while China demand and recession risk are key downside factors. The discussion also covers Trump energy policy, Greenland and China-Taiwan geopolitics, Biden's offshore drilling ban, and European natural gas after the halt in Russian pipeline flows. He does not expect a major European gas spike because the lost volumes are small relative to global LNG and the market has adapted.

Oil rallied into the new year on tighter backwardation, falling inventories, Saudi OSP hikes, and low Russian crude exports.
Bjarne forecasts Brent averaging $75/bbl in 2025, with normal volatility spanning high $50s to close to $90.
OPEC+ spare capacity of 4-5 million b/d is seen capping oil upside; China demand weakness and recession are downside risks.
He argues US policy cannot sustainably push oil to $40 because low prices would cut US production and trigger OPEC+ retaliation.
China-Taiwan conflict risk could be bullish for oil in the run-up and bearish if conflict causes global recession.
Biden's offshore drilling ban is seen as having limited impact on existing US production; Gulf of Mexico still has potential.
European natural gas is not expected to spike after the Russian pipeline halt, as lost flows are only about 2.5% of the global LNG market.
Europe may resume some Russian gas after the Ukraine war, but likely via flexible LNG and at smaller volumes.

Ideas

Bjarne Schieldrop Chief Commodities Analyst at SEB 3:39

Brent averages $75 with wide range

Bjarne expects Brent crude to average $75/bbl in 2025, with normal fluctuations putting the range roughly in the high $50s to close to $90. He sees a tight physical market supported by backwardation, falling inventories, Saudi OSP hikes and low Russian crude exports, but OPEC+ spare capacity of 4-5 million b/d caps upside. Demand growth, especially China's contraction, is the key swing factor.

Bjarne Schieldrop Chief Commodities Analyst at SEB 4:38

US cannot sustain $40 oil

Bjarne does not believe the incoming US administration can sustainably push oil to $42 despite talk of adding 3 million b/d of drilling. Because the US is now the world's largest oil producer and increasingly a large exporter, ultra-low prices would cut US production and force imports; if the US actually added 3 million b/d, OPEC+ would likely abandon cuts and flood the market, collapsing prices to $40, which would then reduce US output and make the policy self-defeating.

Bjarne Schieldrop Chief Commodities Analyst at SEB 20:13

No major European gas spike expected

The halt of Russian gas flows through Ukraine removes only about 0.4 TWh/day, under 150 TWh/year and roughly 2.5% of the global LNG market, so while it slightly tightens global LNG and lifted European gas prices, Bjarne is not concerned about a major spike. Europe and the world have adapted since the Ukraine invasion, winter risk premium is rolling off with a normal Q1 so far, and consumers can switch to cheaper oil if gas trades at a 15% premium to crude.

Oil Hits Highest Level Since October, What's Next? | Bjarne Schieldrop

Summary

Ideas

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