Filenews 13 January 2022
Oil prices, which rose as much as 50% in 2021, will move further upwards this year, analysts cited by Reuters predict. According to them, lack of production capacity and limited investment in the industry may drive crude above $100 a barrel. At this stage, Brent oil prices range from $80 to $83 a barrel, with an upward trend.
Although the Omikron variant has driven COVID-19 cases well above previous highs, analysts argue that oil prices will find support (for their rise) in the reluctance of many governments to reinstate the strict restrictions that pounded the global economy when the pandemic struck in 2020. In previous phases of the coronavirus, the increase in cases or the detection of a new variant led to a decrease in prices, as a contraction in economic activity was predicted, due to the restrictive measures that were expected.
"With the assumption that China will not suffer a sharp slowdown, that Omikron will in fact disappear, and with OPEC+'s ability to increase production visibly limited, I don't see why Brent can't move to $100 in the first quarter, possibly even earlier," Jeffrey Halley said, analyst at OANDA.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies (Russia), known as OPEC+, are gradually easing production cuts implemented when demand collapsed in 2020. However, many smaller producers cannot increase supply, while others appear wary of pumping an excessive amount of oil in case there are other problems due to COVID-19. "We don't want to see the $100 per barrel. The world is not ready for it," Oman's oil minister, Mohamed Al-Rumi, said on Tuesday, according to Bloomberg.
StanleyMorgan predicts that Brent oil will reach $90 a barrel in the third quarter of this year.
Standard Chartered proceeded to revise its Brent price forecast upwards in 2022 by $8, to $75 a barrel and in 2023 by $17 to $77. Analysts at J.P. Morgan expect oil prices to reach up to $90 by the end of the year.
