Brent crude to average $67 in Q2 2018: BMI Research

BMI Research has kept its outlook on average Brent and WTI prices unchanged at $67 per barrel and $61 per barrel, respectively, for Q2 2018, despite increasing geopolitical uncertainties.

“Our bullish outlook on prices rests heavily on a positive story for demand,” BMI Research in a recent report, adding that the OPEC-led output cut deal has played a key role in supporting market recovery.

The agency, however, warned that the reduced supply could return to market in 2019 after the output deal expires at the end of this year.

The continued growth in US shale is also expected to weigh on oil prices the next year.

Meanwhile, deteriorating US-Iranian relations, instability in the Middle East, the Venezuelan debt obligations, and rising global trade tensions are seen as the key risks to the upside for the oil price outlook, BMI Research said.

The Middle East is the “main driver of risk premia in Brent,” the report said.

“Our country risk analysts see geopolitical risks rising in the region this year and we believe risk premia will be a recurrent feature of the oil market,” it added.

However, BMI noted there is a low probability that any of these geopolitical tensions will impact physical production in the Middle East.