BAKU, Azerbaijan, Jan.22
By Leman Zeynalova – Trend:
Oil price spikes are likely in 2022 amid inventory tightness midyear, Trend reports with reference to the Energy Intelligence 2022 Outlook.
“We see an above-consensus path for prices over the next few years, with $75 the normalized level (up from a pre-pandemic range of $60-$65). There is room for significant upside in 2022 amid inventory tightness midyear, especially in the US/OECD. We see Brent averaging close to $80 this year, with potential spikes into the $90s,” reads the report.
The company believes that a possible Iranian deal would be the key price dampener.
Five key market themes shape the 2022 outlook of Energy Intelligence:
- Market tightness returns after winter respite—In the OECD/US markets, in particular, the company sees demand cover lower than it has been for a long time (pre-shale boom in US). Ongoing SPR sales further this trend.
- OPEC+ continues to manage market while scraping spare capacity, watch Iran— the company estimates the group’s nameplate spare capacity at 6 million b/d, but with only about 3 million b/d readily available (underinvestment downside, plus outages). Iran presents a widely divergent pathway for supply, and a possible nuclear agreement would be the main price dampener.
- Oil demand will continue to grow despite long-term climate focus— Energy Intelligence sees pre-COVID-19 levels of demand exceeded in six to nine months, and consumption climbing from there, through 2028. The US will see a significant boost in consumption.
- Supply constraints continue to bite—weak global upstream spending and conservative capex budgeting will continue.
- Geopolitics of a tight oil market will remain in focus—especially in the US in a midterm election year.
Follow the author on Twitter: @Lyaman_Zeyn