VnDirect assesses the most feasible base scenario and oil prices will be affected in the short term before returning to the upward trajectory, the average price in 2022 will reach 75 USD/barrel.
According to VnDirect Securities Company, the price of Brent oil peaked at $86 per barrel in October, the highest level since October 2018. It is expected that the average oil price in 2021 will reach 71.5 USD/barrel, up 60% over the same period.
(Source: VnDirect)
The impressive recovery in oil prices was fueled by strong global demand for crude oil following the COVID-19 pandemic and the gas crisis amid dwindling supply.
However, the arrival of the new variant Omicron has cast a shadow over the global crude oil market as travel restrictions and impede oil demand.
Before this development, experts of VnDirect made three hypothetical scenarios for Brent oil price in 2022.
The most positive scenario plays out when the Omicron variant is not as dangerous as feared. Therefore, the current vaccine will still be effective against this type of variant and oil prices could quickly recover. Oil price in 2022 may reach over 80 USD/barrel.
In the base scenario, it only takes a few months for the world to control the Omicron variant thanks to good vaccine production and vaccination capacity.
Global oil demand is likely to take a hit in the short term, before recovering from a resurgence in international tourism activity.
In this case, experts expect the price of Brent oil to average $75 per barrel in 2022.
In the most negative scenario, when Omicron’s complicated developments lead to tighter travel restriction measures around the world, it puts downward pressure on oil prices as global oil demand declines.
At that time, the price of Brent oil in 2022 fluctuated between 60-65 USD/barrel.
VnDirect assesses the most feasible base scenario and oil prices will be affected in the short term before returning to the upward trajectory, the average price in 2022 will reach 75 USD/barrel.
However, the three crude oil consumption scenarios may differ from reality as the US-Iran nuclear talks could return Iran to its role as an oil supplier with an output of around 2.1 million bpd.
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