Oil markets to remain largely subject to COVID-19 uncertainty in future – GECF

Oil&Gas Materials 7 March 2022 11:02 (UTC +04:00)
Oil markets to remain largely subject to COVID-19 uncertainty in future – GECF

BAKU, Azerbaijan, March 7

By Leman Zeynalova – Trend:

Oil markets will remain largely subject to COVID-19 uncertainty in the future, Trend reports with reference to the Gas Exporting Countries Forum (GECF).

GECF said in its latest report that the Brent oil price has been hit hard by COVID-19 and averaged USD41/bbl in 2020.

“After a strong recovery, it was USD71/bbl on average in 2021. Over the longer term, the expectation is of an average level of USD60/bbl. This forecast is in line with the views of many of the key energy companies, based on comparable data, and with the assumption that OPEC retains its role as the global swing producer.

Oil markets in the future will remain largely subject to COVID-19 uncertainty and the pace of economic recovery together with the rebound in energy demand. Additionally, the precipitous decline in oil and gas investments, the challenges of an accelerated energy transition to combat climate change, geopolitical events in the Middle East becoming more numerous as well as stronger oil production in several non-OPEC+ countries, the normalization of Libya’s and Iran’s oil production, plus a breakdown in the OPEC+ agreement should all be factored into any future price forecasting exercise. In the medium-term, we anticipate the crude oil market will stabilize, and assume beyond 2026 it will follow the long-term trend price of USD60/bbl, reflecting the COVID-19 effect and also taking into account efficiency savings. The Brent crude oil price assumption for the long-term is in line with its historical average price over the thirty years from 1990 to 2019, which was USD60/bbl,” the report reads.

GECF analysts point out that the OPEC+ alliance has reclaimed the status of swing producer, which has contributed to market stability over the last five years.

“After a severe supply disruption in the spring of 2020 and a well-orchestrated rebound of the oil market in late 2020 - throughout 2021, it is obvious that spare capacity held by OPEC+ can, to a significant level, guarantee oil market stability in the medium-term,” says the report.


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