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Irina Slav

Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Prices Will Hit $100 And Stay There - Vitol CEO

  • The Chief executive of Vitol expects oil prices to climb to $100 and remain at that level for an extended period of time.
  • This bullish prediction is driven by a belief that global demand will surge in the second half of the year and could surpass 100 million barrels per day.
  • On the supply side, it is the fear of shrinking spare production capacity and restraint from U.S. shale that is driving oil prices higher.

Oil prices have higher to go, and they will stay there for an extended period of time, says the chief executive of Vitol, Russell Hardy.

“The 100 million-barrel number is probably going to be exceeded this year,” Hardy told Bloomberg, adding, “Demand is going to surge in the second half.”

According to him, demand for crude this year could surpass 100 million barrels daily.

Like many others, Vitol’s chief executive noted that this imbalance on global oil markets is fueling higher inflation and thus threatening to interfere with the recovery of the global economy from the fallout of the pandemic.

However, more oil does not seem to be coming. U.S. and European supermajors are focusing on shareholder returns instead of production growth, and national oil companies in the OPEC+ countries are sticking to their original plan of adding 400,000 bpd to total production every month.

There is a problem with both of these supply channels. First, because in addition to pressure for higher shareholder returns, Big Oil is facing pressure to shrink its oil production because of the energy transition, and second, because most of OPEC+ cannot add as much production as it agreed to last year.

On top of that, U.S. shale is also not drilling fast enough. According to Hardy, this is because of capital constraints and a labor shortage. The bigger problem, however, is global spare production capacity.

“Eventually we’re going to run out of spare capacity,” Hardy told Bloomberg. “That’s what the market is trying to work out -- how worried to be about that scenario.” 

Major Wall Street banks, including Goldman Sachs, Bank of America, JP Morgan, and Morgan Stanley, expect prices to hit $100 a barrel as soon as this year. Some analysts forecast even higher prices, up to $150 per barrel of Brent crude.

By Irina Slav for Oilprice.com

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Leave a comment
  • Mamdouh Salameh on February 21 2022 said:
    Brent crude oil price could be expected to hit $100 during the first half of 2022. The reason is that the global oil market is in its most bullish state since 2014 and the global oil demand has already entered a super-cycle phase which could last up to ten years and take Brent crude to $120 in a few years.

    On the supply side, a significant underinvestment in oil and gas since 2019 and an accelerating decline in global oil inventories are causing a tightness in the market and also raising concerns about a shrinking oil production capacity.

    The failure of US shale oil drillers to raise production significantly has less to do with capital discipline and far more to do with inability to do so.

    The maximum shale oil production could rise in 2022 is estimated at 200,000-300,000 barrels a day (b/d) above 2021 average of 11.0 million barrels a day (mbd).

    Dr Mamdouh G Salameh
    International Oil Economist
    Visiting Professor of Energy Economics at ESCP Europe Business School, London
  • Serton Aardkaar on February 22 2022 said:
    I don’t understand, 2 years ago you told us oil was finished and that it would never go above $25 ever again.

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