BAKU, Azerbaijan, Dec.7
By Leman Zeynalova – Trend:
Omicron, the new variant of COVID-19, poses a major risk to global oil demand, given that about half of it stems from transport, Trend reports with reference to Capital Economics, the UK-based research and development company.
“If the risk materializes, our Brent and WTI oil price forecasts of $60 and $58 per barrel at end-2022, respectively, might need lowering. Oil prices have also fallen because the US and other large oil consumer countries announced in November that they would sell approximately 60–80m barrels of oil from their reserves. Nonetheless, OPEC+ still agreed on 2nd December to push ahead with oil production increases in January,” said the company.
Analysts of Capital Economics increasingly think OPEC+ will struggle to keep up with its production targets, partly due to continued underproduction in Angola and Nigeria.
“We now forecast that OPEC oil production will climb to 29.5m bpd in 2022 rather than 29.8m bpd, meaning global oil production would grow by less. Even before the emergence of Omicron, gasoline demand in Europe appeared to be waning, with mobility there falling as COVID-19 cases and restrictions increased. In the US, mobility has fallen in recent days, although gasoline demand remains close to the average for the time of the year,” note the experts.
Capital Economics believes the risk is that Omicron spreads globally and widespread travel restrictions are re-imposed.
“For now, we have adjusted our short-term global oil demand forecasts to reflect lower gasoline demand in Europe, along with lower jet fuel demand globally, as countries have already moved to tighten their borders. On balance, our updated forecasts of lower global oil demand and lower OPEC production in 2022 translate into only small changes to our oil market balance forecasts. So, for the time being we have left our oil price forecasts unchanged, but downside risk has risen, and futures prices have dropped,” the company said.
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