Bank of America's Francisco Blanch: oil supplies will return to normal as it serves both US and Iran interests
Bank of America head of commodities and derivatives research Francisco Blanch told El País in a Madrid interview that oil supplies around the Strait of Hormuz will fully normalise within three to five weeks and that Brent crude will drift back to 75 dollars. Blanch pointed to a shared US-Iran interest in stable energy markets.
Speaking with El País on the sidelines of a Madrid banking conference, Blanch said Brent crude's drop in the past week from a band of 89 dollars to about 81 dollars is « only the beginning, » and that he expects markets to fully normalise around mid-year. Blanch estimates that re-establishing the full 18-million-barrel-a-day flow through the Strait of Hormuz will take 21 to 35 days.
Blanch stressed that the US release of 50 million barrels from the Strategic Petroleum Reserve has supported the market balance and that Iranian export flows to China have returned to 1.4 million barrels per day. « The US and Iran share a common interest in energy-market stability: one side's cash flow and the other side's inflation dynamics both depend on it, » he added.
The analyst said he does not expect a change of production policy at OPEC+'s July 6 meeting and that the 75-78 dollar range for Brent is consistent with year-end equilibrium. Bank of America has opened buy-side positions on US independent refiners and Brazil's Petrobras among recommended exposures.
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