Brent to fall to $85 per barrel in 2012

The factors that we had thought would undermine oil prices over the course of the year have been gradually falling into place, namely slower growth both in advanced and emerging economies, a reduction in Middle East risks, increased nervousness in global financial markets and a partial recovery in the dollar. But, at around $115 today, the price of a barrel of Brent crude has not fallen as quickly as we had anticipated, so we are raising our end-2011 forecast from $85 to $100. This suggests that lower oil prices will not provide as much support for the global economy as we had hoped, further increasing the risk of double-dips in some countries. However, we continue to expect Brent to be back at around $85 by the middle of next year.