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Charles Kennedy

Charles Kennedy

Charles is a writer for Oilprice.com

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Big Oil Backs $100 Crude Narrative

Three Big Oil chief executives have joined analysts and traders in expecting Brent crude to reach $100 per barrel, Bloomberg reports.

Exxon’s Darren Woods, Patrick Pouyanne of TotalEnergies, and Shell’s Ben van Beurden said oil prices could continue rising because of the tightness of supply brought about by lower investments in production. They added, however, that market volatility could also pressure prices.

Lack of sufficient investments was “going to exacerbate supply and demand tightness as the economies pick back up again, and then in time we’ll see supply pick up and rebalance,” Exxon’s Woods said at the Qatar Economic Forum this week, adding that over the short term, this lack of investments would likely result in higher oil prices.

Bank of America earlier this week forecast Brent could top $100 by next year as demand exceeds supply amid a stronger than expected rebound.

“We believe that the robust global oil demand recovery will outpace supply growth over the next 18 months, further draining inventories and setting the stage for higher oil prices,” the bank’s analysts wrote in a note.

Commodity major Trafigura has also predicted a return of oil to three-digit territory over the next 12 months, and Goldman Sachs analysts have said they would not rule such a development out.

Worldwide consumption of oil is expected to nearly reach pre-pandemic levels in the fourth quarter this year and to exceed 2019 demand in 2022, setting a new record for annual global oil demand. The economic rebound around the world, combined with easing or end of COVID-related restrictions, including for travel, is set to incentivize demand for fuels and petrochemicals. 

Meanwhile, OPEC+ stands ready to act, with some 5.8 million bpd in idled production capacity. Reports this week suggested the cartel may add more barrels to supply from August after it plans to return a little over 2 million bpd between May and July.

By Charles Kennedy for Oilprice.com

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