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The world must brace itself for a further surge in oil prices

The world must brace itself for a further surge in oil prices

Outlook for production is bleak with Russian shortfalls hard to replace

With Russia’s sanctions-hit oil output facing an increasingly difficult route to market, there are legitimate fears that supply could fall much further © Andrey Rudakov/Bloomberg Share on twitter (opens new window) Share on facebook (opens new window) Share on linkedin (opens new window) Save David Sheppard, Energy Editor YESTERDAY 130 Print this page Receive free Oil updates We’ll send you a myFT Daily Digest email rounding up the latest Oil news every morning.

JPMorgan’s chief executive Jamie Dimon thinks oil prices could surge to $175 a barrel later this year. Jeremy Weir, the head of commodity trader Trafigura, says oil could go “parabolic”.

Energy Aspects, a consultancy with clients stretching from hedge funds to state energy companies, says we are facing “perhaps the most bullish oil market there ever has been”. Goldman Sachs thinks oil prices will “average” $140 a barrel in the third quarter of this year.

It is tempting to dismiss this mass outbreak of bullishness as book-talking by banks and traders positioned for a short-term rise in crude, which has already reached $120 a barrel.

Those with long memories recall the surge in oil to $147 a barrel on the eve of the financial crisis, when Goldman was among the chief cheerleaders for a rally that quickly reversed as the economy went south. Oil was at $40 a barrel by Christmas 2008, yet some of the bonuses earned by Wall Street energy traders that year went down in market lore.

But while a healthy dash of scepticism is usually warranted with price forecasts, you only need to scratch the surface of the oil market to see that these bullish calls are, this time, well-founded.

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