Russia-Ukraine tensions: JPMorgan, Goldman Sachs, others raise crude price target as war intensifies

Crude oil (representative image)

As the Russian invasion of Ukraine has upended commodity markets putting inflationary pressure on governments, Wall Street banks including Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. have boosted their oil price forecasts, anticipating possible supply disruptions.

Ever since Russian President Vladimir Putin announced the 'special military operation' on Ukraine, oil has been rising on fears that the Western sanctions on Russia over the Ukraine conflict will disrupt shipments from Russia - which is the world's biggest exporter of crude and oil products combined.

Catch all live updates of the Russia-Ukraine conflict here

Notably, Russia is also the world’s third-biggest oil producer and, along with Saudi Arabia, an influential member of the OPEC+ alliance.

So far, US and Europe have stopped short of imposing sanctions directly over Russian commodities, the trade in those raw materials is seizing up due to a rise in shipping costs. Trading activity for Russian crude oil appeared frozen as buyers are hesitant in making purchases because of the sanctions.

Here's a list of all banks that have raised their crude oil outlook amid the ongoing Russia-Ukraine war:

1. JPMorgan Chase & Co

Brent crude could end the year at $185 a barrel if Russian supply continues to be disrupted, wrote JPMorgan Chase & Co. wrote in a recent note.

Brent crude futures approached $120 earlier on March 3 after Moscow invaded Ukraine. US President Joe Biden is facing calls to ban Russian imports of energy, but has not imposed full sanction on oil so far. JPMorgan analysts said that currently 66 percent of Russian oil is struggling to find buyers.

The bank  has maintained its price forecast, which calls for Brent to average $110 a barrel in the second quarter, $100 in in the third quarter, and $90 in the fourth quarter.

2. Goldman Sachs

Goldman Sachs also raised its one-month forecast for Brent crude prices to $115 per barrel, up from $95. The upward revision comes amid the escalating geopolitical tensions due to the Russia-Ukraine war, with Russia being hit by crippling sanctions from the West.

Goldman Sachs analysts noted that a demand destruction of up to four million barrels is needed to offset the loss of Russian supplies in the global market.

Earlier, the bank expected oil prices hitting $100 per barrel in the second half of this year, citing a lower than expected hit to demand from the Omicron coronavirus variant, along with increased supply disruptions and OPEC+ shortfalls.

3. Morgan Stanley

Morgan Stanley has upped its target from Brent Crude to $110 per barrel from $100/bbl. It expects crude to touch these levels in the second quarter of the calendar year 2022. The bull case target for crude is $125/bbl. According to the brokerage, the oil market was already tight, and in such situations, even a small disruption can have large price impacts.

The only risk to the crude target is the Iranian supply. It is currently expecting 1 mbpd of supplies between mid-to-end 2022. However, there are large uncertainties around the same, says the brokerage.

4. BofA (Bank of America)

Before the Russia-Ukraine tensions escalated in early 2022, Bank of America expected Brent crude to hit $120 a barrel by the end of June 2022. BofA analysts noted that a global energy crisis has sent prices for gas and coal soaring around the world, and this has turbocharged the recovery in benchmark London- and New York-traded oil futures.

Also Read: Oil rebounds as escalating Ukraine conflict raises supply concerns

On March 4, oil prices rebounded as the disruption of Russian oil exports because of western sanctions - including US, UK, and EU, outweighed the prospect of more Iranian supplies from a possible nuclear deal.

Oil prices are set to post their strongest weekly gains since the middle of 2020, with West Texas Intermediate (WTI) up more than 22 percent and Brent at 16 percent after hitting their highest in a decade this week.