Oil to enter 2022 at higher price supported by ongoing recovery

Oil&Gas Materials 3 November 2021 12:57 (UTC +04:00)

BAKU, Azerbaijan, Nov.3

By Leman Zeynalova – Trend:

Brent crude price is forecast to average USD72/bbl and USD73/bbl in 2022 and 2023, respectively, Trend reports with reference to Fitch Solutions.

The company previously forecasted the prices to stand at USD67/bbl and USD68/bbl in 2022 and 2023, respectively.

“We expect prices to enter the new year at around the USD80/bbl mark, supported by the ongoing recovery in oil demand, continued constraints on supply and spillovers from the broader energy crisis. The macroeconomic backdrop has become somewhat less supportive, as the post-pandemic recovery slows and high energy prices, labour shortages and supply chain disruptions sap the momentum behind growth,” said Fitch Solutions.

However, the company believes that Brent has so far shrugged off broader market pressures and will likely find continued support from inflation hedging and the bullish fundamentals for oil.

“From 2022, market conditions will become more challenging, as demand growth decelerates and OPEC+, the US and potentially Iran ratchet up large production gains, tipping the market back into oversupply. We expect prices to relapse during H122, with the glut taking several years to work off in full,” said the company.

Fitch Solutions predicts that as demand growth decelerates, supply will soar.

“The gains will be led by OPEC+, with the OPEC-10 producers contributing around 50 percent of global growth in 2022 and Russia a further 12 percent. Concerns have been raised as to the ability of the group to fully unwind its cuts, with underlying decline rates and a lack of investment set to drive y-o-y production declines in a number of markets over 2022 and 2023, largely in West Africa.”


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