Fitch Ratings raises 2021-2022 oil price assumptions

Fitch Ratings raises 2021-2022 oil price assumptions

Fitch Ratings has raised its 2021 and 2022 oil price assumptions for Brent and West Texas Intermediate (WTI) benchmarks to reflect a stronger-than-expected demand recovery and supportive OPEC+ output policies, Trend reports.

The 2021 gas price assumptions have also been increased reflecting higher demand due to the cold northern hemisphere winter and an economic rebound in Asia.

"We have significantly increased our 2021 price assumptions to USD58 a barrel (bbl) from USD45/bbl for Brent and to USD55/bbl from USD42/bbl for WTI. This reflects stronger-thanexpected oil demand and an economic recovery in 2H20, the fairly small impact of the latest lockdowns and other mobility restrictions, and OPEC+'s supply management, which includes Saudi Arabia's voluntary cuts of a million barrels a day. We consider such supply management policies as being prudent. Furthermore, oil prices will continue to benefit in the short term from positive sentiment due to successful vaccination roll-outs and the upcoming USD1.9 trillion stimulus package in the US.

However, Fitch assumes prices will moderate in 2H21 and into 2022 (the market is in backwardation with near-dated prices higher than later-dated ones). We therefore only raised our 2022 assumptions by USD3/bbl to USD53/bbl and USD50/bbl for Brent and WTI, respectively. We expect OPEC+ to continue actively managing supply, at least in the medium term, and that excess oil inventories will normalise quickly. We kept longer-dated prices unchanged and these continue to incorporate the expected marginal cost of supply, as well as energy transition risks.

OPEC+ production cuts were the main driving force that helped the market rebalance fairly quickly in 2H20. On March 4, OPEC+ rolled over existing production quotas until April (Kazakhstan and Russia were allowed marginal production increases) and Saudi Arabia committed to keeping its voluntary cuts. This should accelerate inventory normalisation and support prices, at least in April. Once inventories have been normalised, we expect OPEC+ to adjust its production in line with demand to avoid significant deficits or surpluses, which could result in prices moving into the USD50/bbl-USD60/bbl range.

IEA expects demand to improve further in 2H21 as vaccination is rolled out and mobility restrictions are gradually eased. Despite the oil price recovery, US shale production is unlikely to grow at the rates seen before the pandemic due to producers' increased focus on free cashflow generation, debt reduction and shareholder distributions, and consolidation in the sector. However, there could be a positive US supply response to the high prices in the near term.

While we expect OPEC+ to continue managing supply over the next one or two years, views on how to do so may diverge. Russia has been pushing for production increases and was effectively allocated a marginally higher quota in early 2021. In the long term, agreeing on similar deals may be more challenging. Iraq, Kuwait, Russia and the UAE are planning long-term production increases, while many producers' output, including Saudi Arabia and the UAE, was already well below their capacity before the pandemic. Future OPEC+ discussions could be complicated by the energy transition and some countries' desire to increase production volumes to monetise their oil reserves.

Our increased gas price assumption for 2021 reflects cold weather in the northern hemisphere in early 2021, outages at numerous LNG plants and logistical issues experienced by LNG carriers, while demand in many Asian countries has increased due to their economic rebound. European gas storage is only 34% full, down from 60% in early March 2020, supporting higher 2021 prices. We kept our prices for the rest of the period unchanged," said Fitch.

Turkish Airlines receives permission to operate flights to number of Uzbek cities
Turkish Airlines receives permission to operate flights to number of Uzbek cities
Uzbekistan, France agree on deepening interaction in textile industry
Uzbekistan, France agree on deepening interaction in textile industry
Russian iron and steel works company reveals supplies of metal production to Uzbekistan
Russian iron and steel works company reveals supplies of metal production to Uzbekistan
Loading Bars
Azerbaijan joins initiative of single roaming space between Eastern Partnership countries
Turkish Airlines receives permission to operate flights to number of Uzbek cities
Kazakhstan’s KMK Munay decides against paying out dividends for 2020
Kazakhstan's revenues from maritime cargo transport surge
High freight rates significantly raise global prices of commercial ships
Central Bank of Iran allocates funds for import of vaccines
Iran's Energy Exchange announces products to be on sale on April 21
Geostat reveals Producer Price Indices for services in Georgia
Turkmenistan boosts imports of Turkish-made chemicals
Uzbekistan, France agree on deepening interaction in textile industry
Boeing CFO Smith to retire in July
Georgia increase tea import from Azerbaijan
Czech Development Agency talks projects in Georgia
Georgia sees increase in Export Price Index
Domestic Producer Price Index for Industrial Products up in Georgia
Number of oil, gas wells drilled in Iran revealed
Kazakhstan's exports to Bulgaria plummet
Iran's Esfarayen Industrial Complex to increase exports
Azerbaijani payment system to offer instant digital banking cards
Russian iron and steel works company reveals supplies of metal production to Uzbekistan
Baku Higher Oil School organized a webinar on the topic 'Higher Education and Research in the Post-COVID Period' (PHOTO)
PACE can offer support for establishment of lasting peace in South Caucasus - SecGen
Israel's government debt jumped to nearly NIS 1t in 2020
TAP’s gas deliveries for Q1 2021 disclosed
Swiss investments in Azerbaijan concentrated in non-oil sector – Swiss ministry
Azerbaijan names number of vaccinated citizens
Iran to receive vaccine through COVAX
Iran increases salaries for army personnel
Producer Price Index for Industrial Products up in Georgia
Iranian private sector to import 6 million doses of COVID-19 vaccine
Iran to implement extensive and maximum vaccination plan - President Rouhani
Budget provides continued support to Georgian economy - IMF mission
Azerbaijan confirms 2,197 more COVID-19 cases, 1,946 recoveries
Georgia sees decrease in external debt
Pakistan always supports Azerbaijan's just position - Pakistani Admiral
Bahar Azadi gold coin price still falling in Iran
Chairman of Iran Tea Organization talks about tea growing
Russia ready to help Kazakhstan in construction of nuclear power plant
Israeli journalists visit roadside inn in Azerbaijan’s Fuzuli, turned into barn by Armenians during occupation (PHOTO)
Uzbekistan taking additional measures to develop karakul sheep breeding
US company to build cannabis farm in Uzbekistan
France’s Orano to develop new mining sector in Kazakhstan
National Bank of Georgia remains focused on achieving its inflation target
Azerbaijan's International Bank discloses 1Q2021 net profit
Turkmenistan joins WIPO Patent Law Treaty
Armenia outraged by Russian PACE delegates refusal to discuss so-called "issue of POWs”
Electricity generation of Iran's hydroelectric power plants to decline
Azerbaijan's 1Q2021 polyethylene production slightly down
Russian Railways to build high-speed railway entries to Moscow, St. Petersburg by 2024
UAE central bank extends some stimulus measures until mid-2022
President Aliyev interviewed by Azerbaijan Television (PHOTO)
Important to observe int’l law to avoid such conflicts as Karabakh one in future - Chancellor of Germany
UK eases post-Brexit controls on vehicles taking goods to the EU
PayPal's Venmo launches crypto buying and selling
Iran's shares data on sale of public assets
President Ilham Aliyev attends inauguration of Azersun Shamakhi Agropark in Hajigabul (PHOTO)
Iran expects revival of JCPOA in short term
Liabilities of International Bank of Azerbaijan increase
Sinovac supplied 260 mln COVID-19 vaccine doses globally
Azerbaijan names number of foreign visitors in 1Q2021
Elbit Systems awarded $41m US Marines night vision deal
Price of wheat purchased from farmers in Iran increases
President Ilham Aliyev launches 110/35/10 Kv “Garasu” substation in Hajiqabul (PHOTO)
Baku-Tbilisi-Ceyhan’s oil transportation to Turkey down y-o-y
Kazakh oilfield construction company opens tender to buy pipes
SOCAR sums up Kulevi oil terminal’s Q1 2020 performance
Total assets of International Bank of Azerbaijan increase
Iran declares value of exports from cooperative enterprises in Razavi Khorasan Province
Uzbekistan plans introducing charter flights to popular destinations
Companies from Russia’s Smolensk begin to export products to Azerbaijan
Iran reveals COVID-19 data for April 20
Amount of registered Iranian companies in Turkey down
Khazar Consortium in Turkmenistan opens tender for equipment purchase
Azerbaijani banks' foreign currency demand disclosed
Border checkpoint between Iran, Pakistan to be opened
SOCAR’s petrochemical complex to significantly increase sales – Yapi Kredi
French EDF eyes building pumped-storage power plant in Uzbekistan
Turkmenistan's Turkmenhimiya extends tender for turnkey plant construction
Major Iranian companies boost iron ore pellets production
India hopeful US will soon end curbs on Covid vaccine raw materials export
BRO upgrades crucial 110 feet long bridge on India's Leh-Sarchu Road in 8 days
73,600 Covid vaccination centres operational in India on Monday, highest till date
J&J Seeks India's Permission For Phase 3 Trial Of 1-Shot Vaccine: Report
IAF chief RKS Bhadauria visits France as Rafale deliveries gain pace
Covid-19 vaccines for all adults in India from May 1, says Centre
Solar panel stations launched in Iran
Azerbaijan sees surge in 1Q2021 manufacturing of tobacco products
Kazakhstan boosts trade turnover volume with Austria
Yapi Kredi reveals forecasts for SOCAR’s Petkim
EAM Jaishankar speaks to US Secretary of State, exchanges views on Covid, UNSC agenda
Iran sees increase in car manufacturing
Azerbaijan issues data on 1Q2021 oil exports to India
President Ilham Aliyev attends presentation of agropark owned by Agro Dairy LLC in Hajigabul (PHOTO)
Israel logs Indian COVID-19 variant, sees some vaccine efficacy against it
Turkey discloses info on cargo movement via Cesme port for 2M2021
President Ilham Aliyev watches sowing process in farmer Elshan Khalilov’s cotton field
Germany raises import of Turkish-made furniture
Several facilities put into operation in Iran’s Parand New City
President Ilham Aliyev opens Hajigabul-Mughan highway after renovation (PHOTO)
Turkmenistan continues industrial production during pandemic
All news