Brent Crude prices are expected to average $79.40 next year, according to the International Energy Agency, which raised its oil price assumptions for 2021 and 2022.
This year, Brent Crude prices are set to average $71.50, the IEA’s latest assumptions cited by Reuters show.
In a statement to the news agency, the IEA said, “We publish our price assumptions when we think that this can be useful for the understanding of our forecast.”
“As current prices are getting more elevated, they start to have a significant effect on demand,” the Paris-based international agency said in a statement to Reuters as it published its Monthly Oil Market report for November.
In the report, the IEA lefts its 2021 and 2022 oil demand growth forecasts largely unchanged from last month at a growth of 5.5 million barrels per day (bpd) this year and another 3.4 million bpd growth next year.
Strengthening demand with robust gasoline consumption and a rise in international airline travel will be offset by new COVID waves in Europe, weaker industrial activity, and higher oil prices, the IEA said.
Last week, OPEC revised down its 2021 demand forecast by 160,000 bpd after cutting expectations of fourth-quarter consumption by 330,000 bpd compared to last month’s outlook. The downward revision was mainly due to slower than anticipated demand from China and India in the third quarter and a slowdown in demand recovery in Q4 due to high oil prices. OPEC, however, left unchanged its outlook for next year, expecting average global oil demand will exceed pre-COVID levels. Total oil demand in 2022 is now estimated to reach 100.6 million bpd, or around 500,000 bpd above 2019 levels, OPEC said.
Today, the IEA said that the oil price rally may soon find reprieve due to rising global oil supply, led by the U.S.
“The world oil market remains tight by all measures, but a reprieve from the price rally could be on the horizon,” the IEA said in its monthly report.
By Tsvetana Paraskova for Oilprice.com
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And with an expected supply deficit in 2022 estimated at 5 million barrels a day (mbd), Brent crude could hit $90-$100 a barrel and average $81-$82 in 2022.
An estimated rise in US shale oil production by 200,000-300,000 barrels a day (b/d) in 2020 will hardly impact on global oil production and prices.
Dr Mamdouh G Salameh
International Oil Economist
Visiting Professor of Energy Economics at ESCP Europe Business School, London