OMV raises forecast for Brent crude oil

Aug. 2 (UPI) -- Austrian energy company OMV raised its 2018 forecast for the price of oil by almost 6 percent, but cited a second half average lower than its prediction.

The Austrian oil and gas company reported second quarter net profit of $237 million, compared to a net loss of $1.2 billion during the same period last year. Earnings per share increased significantly, from a loss of $3.60 per share to a gain of $0.72.

The improvement is indicative of the gains in the price of crude oil from last year. OMV said its realized crude oil price for the second quarter was 23 percent higher than last year, though for gas, the price dropped 6 percent.

"In the first six months of the year, the average Brent price reached $71 per barrel, an increase of 36 percent, predominantly due to higher geopolitical risk," the company's statement read.

In 2017, World Bank President Jim Yong Kim said global economic momentum was "robust," but warned the interdependent world that normally binds peace to deeper levels of connectivity was "falling apart and countries and peoples are pulling away from each other."

In his message for the New Year, U.N. Secretary-General António Guterres issued a red alert, saying that many of the world's problems can be addressed only through unity.

At the start of the year, Joe McMonigle, a senior energy analyst at Hedgeye Risk Management, warned that oil markets "could see a few geopolitical lottery tickets in 2018." Since then, Libya has faced steady security threats in the western oil belts, Iran has been forced to brace for tough oil-related sanctions and Saudi Arabia halted some of its oil shipments in the Red Sea because of attacks by Houthi rebels in Yemen.

For the year, OMV said it expected an average price for Brent crude oil at $70 per barrel on average, an increase from its previous estimate of $68 per barrel. Brent was trading at around $72 per barrel early Thursday morning EDT.

That sentiment contrasts with expectations from British supermajor BP. The company's CEO, Bob Dudley, said supply disruptions from countries like Libya and Venezuela and the potential impact of U.S. sanctions on Iran were short-term factors supportive of the price of oil.

Further out, Dudley said he did not expect the price of oil to maintain its current level.

"We continue to plan for oil prices in the range of $50-$65 per barrel," he said.