BAKU, Azerbaijan, Apr.6
By Leman Zeynalova - Trend:
Consistent with the projected global recovery, oil prices are projected to grow 30 percent in 2021 from their low base in 2020, in part reflecting the OPEC+ supply curbs, Trend reports citing IMF.
“Oil prices increased by 39 percent between August 2020 and February 2021 on positive vaccine news and the rapid economic recovery in Asia. A resurgence of COVID-19 cases and difficulties in vaccine rollout at the beginning of the year weakened the oil demand outlook and led the OPEC+ coalition to review more prudently the relaxation of the 7 million barrels a day production curbs announced in April 2020. Futures markets point to backwardation, with oil prices at $58.5 a barrel in 2021—42 percent higher than the 2020 average—falling to $50.7 in 2025. This is mostly because of a temporary tight demand-supply balance expected this year—in line with International Energy Agency projections of a steady decline in oil inventories, with oil demand (supply) projected at 96.4 million barrels a day (95.5 million barrels a day) in 2021,” IMF said in its latest report.
Although oil prices persistently above $60 a barrel may induce a substantial production recovery of higher-cost producers in non-OPEC+ countries, including of US shale oil, most of them seem focused on balance sheet repair, according to the report.
“Risks to oil prices are slightly tilted to the upside as upside risks from large cuts in oil and gas upstream investments exceed downside risks from a setback in global oil demand recovery, still elevated inventories, and, in the medium term, a breakdown of the OPEC+ coalition.”
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