As oil companies begin to report their impressive Q2 results on the back of high oil prices, they are also offering premonitions of even higher oil prices on the back of the tight supply situation.
Shell’s Chief Executive Officer Ben van Beurden told Bloomberg TV on Thursday that there is more upside than downside for crude oil prices. “Demand hasn’t fully recovered yet and supply is definitely tight.”
Van Beurden added that he sees little room for more oil production from OPEC or U.S. shale producers—and the world oil supply could be even further curtailed as the full impact of Russia sanctions goes into effect later this year.
When asked about how retail prices for oil and gas could be lowered, van Beurden responded, “We cannot perform miracles.”
“Energy markets are tight,” van Beurden said, adding that supply would be constrained and markets tight for the rest of this year and well into next.
The same general sentiment was touted by TotalEnergies CEO Patrick Pouyanne, who said he saw room for oil demand to go higher, but not a lot of room for oil production to go higher.
Both Shell and Total announced plans on Thursday to extend share buybacks on impressive results that doubled and nearly tripled Q2 2021 earnings, respectively.
Shell reported that second-quarter earnings hit a new record of $11.472 billion, while Total reported a net income of $5.7 billion.
The tight physical market has kept a floor under oil prices even in the face of a recession that could dent demand.
That tight physical market is precisely what has emboldened TotalEnergies to forge ahead with some riskier projects in Mozambique and Uganda.
The price of Brent crude oil has climbed to $107 per barrel—up $29 per barrel since the start of the year. The oil majors’ projections that oil prices could go still higher will not come as welcomed news to retail gasoline buyers or the Biden Administration, which has battled high gasoline prices since taking office.
By Julianne Geiger for Oilprice.com
More Top Reads From Oilprice.com:
- Saudi Aramco May Hike Flagship Crude Prices To Record High Over Benchmarks
- TotalEnergies Profit More Than Doubles On High Oil And Gas Prices
- Shell Books Record Profit As Commodity Prices Rally