Morning Notes — Crude Prices

Brent price forecasts in the $150-$200 are worst-case scenarios based on little/no Russian supply finding its way to markets.  Oil and natural gas revenue are Russia’s current economic lifeline, so these scenarios must assume the short-term voluntary avoidance of Russian Urals continues. Markets are now pricing in a more realistic picture based on India and China’s apparent willingness to buy Russian crude at discounted prices. As crude finds a more realistic short-term level, it’s important to keep the long-term underinvestment thesis in mind, and look for spots to add exposure.