The fact that OPEC + firmly grasps the role of regulating supply, releasing in a trickle, the price of Brent oil will reach 120 USD/barrel in 2022, even skyrocketing to 150 USD/barrel in 2023.
According to Businessinsider page, analysts of JP Morgan bank forecast that crude oil price could rise to 120 USD/barrel in 2022 and 150 USD/barrel in 2023 because of group of oil producing countries and allies (OPEC+) ) limit “pumping” to protect oil prices at a higher level.
This means that the Biden administration’s release of strategic oil reserves has little impact on oil prices. The proof is that after the US put 50 million barrels on the market, oil prices still increased.
Thus, the main driving force driving oil prices is still supply and demand. Besides, when the Omicron variant causes oil prices to plunge due to concerns that travel restrictions will reduce oil demand. JPMorgan considers this an overreaction.
We think the market is overestimating the effects of the Omicron variant on US holiday oil prices.
This variation will have no or very small impact on this holiday oil price even if the Omicron variant spreads, JPMorgan said.
JPMorgan analysts think that the appearance of the Omicron variant does not have much impact on oil prices. (Photo: Reuters)
Oil demand remains stable. Therefore, supply will be the determining factor in oil prices for many years to come.
The fact that OPEC + firmly grasps the role of supply regulation, the price of Brent oil will reach 120 USD/barrel in 2022 and may skyrocket to 150 USD/barrel in 2023, double the current level.
“We believe OPEC+ will protect oil prices by injecting oil on a drip basis to keep inventories low, balance the market, and manage stocks well,” JPMorgan explained.
Increased supply from US oil producers could put downward pressure on oil prices.
But the number of US oil rigs is now half what it was in 2019, and investments in the sector have slowed since the fall of oil prices amid the pandemic outbreak in 2020.
This is also one of the reasons why oil prices continue to rise, at least until the US restores production to pre-pandemic levels.
According to Oil Price, JP Morgan estimates OPEC+ spare capacity in 2022 at around 2 million bpd, just 43% of the previous consensus members’ level of 4.8 million bpd.
“We think that in the first half of 2022 there will be 3 months that need to cut production to 400,000 bpd to balance the market and consider the impact of the new variant of Omicron.
However, we will struggle to replenish 250,000 bpd when demand recovers,” the analyst said.
It is expected that OPEC + will meet this weekend to assess the impact of the Omicron variant on oil demand and price, whether to supplement supply in the context of complicated epidemic developments and after the US, UK and a A number of Asian countries open oil reserves.
The source of Reuters said that oil prices fell sharply after the appearance of the Omicron variant, but will quickly recover. They need more time to understand what the new variant is and whether a reaction is needed.
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