BAKU, Azerbaijan, Nov.24
By Leman Zeynalova – Trend:
The market will return to a significant surplus in H122, triggering a large decline in Brent, Trend reports with reference to Fitch Solutions.
“Our latest Brent forecast for November calls for 2022 annual average Brent prices of USD72/bbl which is well below the current front month prices near USD79/bbl. The market will likely remain loose for several years, allowing for only a gradual recovery in oil prices, beginning in 2023. 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,” reads the report released by Fitch Solutions.
The company notes that 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.
“The macroeconomic backdrop has become somewhat less supportive, as the post-pandemic recovery slows and high energy prices, labor shortages and supply chain disruptions sap the momentum behind growth. The global economic recovery is flagging and our economists have revised down their global real GDP growth forecast for 2021 from 5.9 percent to 5.5 percent, reflecting downward growth revisions in both developed and emerging markets, including China and the US,” the report says.
Fitch Solutions is also forecasting significant production growth in Iran over the coming 12-24 months, on the expectation that US secondary sanctions will be lifted, unleashing around an additional 1.2mn b/d of crude exports.
The company’s view remains that a nuclear agreement will be reached in 2022.
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