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Oil market conditions to become more challenging from 2022

Oil&Gas Materials 29 October 2021 15:10 (UTC +04:00)
Oil market conditions to become more challenging from 2022

BAKU, Azerbaijan, Oct.29

By Leman Zeynalova – Trend:

From 2022, oil market conditions become more challenging, as large supply additions by OPEC+, the US and potentially Iran overwhelm the growth in demand, Trend reports with reference to Fitch Solutions.

Brent has dipped back down below USD85.0/bbl, trading at around USD83.5/bbl at the time of writing, due to inventory gains in the US and an announcement by Iran that nuclear talks will resume by the end of November.

“The market looks set to remain tight over the coming months as demand growth, led by Asia, outstrips the increase in supply by OPEC+ and the US. Despite signs that the market is severely undersupplied, OPEC+ has proved reluctant to accelerate the return of its cut barrels to market and we do not expect its position to change. Brent is being given an additional lift by the broader energy crisis, in particular the steep rally in global gas prices. However, we believe the rally has likely neared its peak and that prices, while remaining elevated, will soften in the near term,” said the company.

Capital Economics, the UK-based research and consulting company notes that OPEC+ looks set to stick to its current plan to unwind oil production cuts by the end of 2022, despite calls for a faster unwinding due to high prices.

“Saudi Arabia appears content with the current schedule, ostensibly out of concern about a possible downturn in demand. US output should also continue to slowly recover from the disruption caused by Hurricane Ida. All in all, we forecast that the global oil market will flip into a surplus for the first time in two years next year, which should weigh on prices.”

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Follow the author on Twitter: @Lyaman_Zeyn

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