BAKU, Azerbaijan, July 29
By Leman Zeynalova – Trend:
Oil market will face a deficit in 2021 and shift to surplus in 2022, Trend reports with reference to Oxford Energy Institute.
“We now project a 0.7 mb/d market deficit in 2021 and a 2.4 mb/d surplus in 2022. Assuming OPEC+ eases its cuts in 2021 and 2022 and Iran ramps up its production in the first half of 2022, the market will shift to a surplus next year, but the expected strong demand rebound in H2 2021 will keep the market in deficit in 2021. Despite OPEC+ production finding its way back into the market, market deficits remain large in 2021 but surplus pressures build anew in 2022. The gradual easing of OPEC+ cuts amid the return of Iranian production and higher US shale activity are seen increasing supplies in 2022. Balances in 2022 could still find support from either the supply or demand side of the market, or both, narrowing the surpluses and leading to a more balanced market,” reads the report published by the Institute.
Oxford Energy Institute experts believe that a gradual, cautious and flexible approach to easing OPEC+ cuts provides the lowest volatile path for OPEC+.
“OPEC+ supply path has become more uncertain. Unlike March 2020, there is an agreement in place until April 2022. A disorderly exit from the current deal is highly improbable. Despite oil prices gaining sharply, non-OPEC supply growth in 2021 is expected to remain modest but will gain in 2022 with the US leading the growth.
OPEC+ producers agreed to ease output cuts by 2 mb/d between August and December 2021, adding 400 kb/d each month over this period. § A review is planned during the OPEC+ Conference in December 2021. Extension of agreement until end of 2022 implies there is a buffer of up to 3 months until December 2022 in which OPEC+ may decide not to release the full 400 kb/d increment or increase the cut by up to 400 kb/d. If the 400 kb/d reductions per month will carry on till April 2022, OPEC+ will release 3.6 mb/d to the market. The remaining 2.16 mb/d to be released in monthly increments of 432 kb/d between May 2022 and September 2022,” reads the report.
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