IEA: Need at least 5 million barrels per day of supply over the next year to meet expected increase in demand
(Representative image) | Photo credit: Getty Images
- Barret says demand is not very far from pre-pandemic levels and we should reach 2019 crude demand levels by the end of this year
- The market lacks 1.5 minutes of bpd to have a fully balanced market by the end of the year and this shortfall can easily be filled by OPEC producers according to Barret
- When asked for a range or rough forecast, he says look at the US to assess expected levels
Bombay: Amid the complex carnage of raw materials, crude managed to limit losses to just over 1%. It remained stable below the $ 71 / bbl mark. The past few days have seen a massive increase in crude, triggered by the IEA report which indicates a tight crude oil market.
Christophe Barret, Senior Oil Market Analyst, AIE, says that in April and May economic activity picked up very quickly and mobility indicators show demand is accelerating very quickly in the United States and in the EU.
“The vaccinated countries are showing a very strong rebound in demand,” explains Barret. Going forward, summer could see unusually high demand in the US and EU
Barret says we are not very far from pre-pandemic crude demand levels “We should see demand return to 2019 levels by Q4CY22, gasoline demand is already very close to what it was in 2019, ”Barret.
So, in the midst of soaring demand, what does the supply picture look like? Barret says the supply is currently sufficient to meet demand throughout the summer, but after the summer the situation will change. “OPEC + is committed to increasing supply by 2 million barrels per day until July and the non-OPEC supply could increase by 1 million barrels per day, but we need an additional supply of gross of OPEC because they still have a lot of capacity available “
Barret says much of the 1-minute barrels-per-day oil production from non-OPEC producers will come from the United States. “It took a long time for US drillers to bring production on line, but with current prices, US producers are expected to come back and even start investing.”
American drillers make a profit when crude is between $ 50 and $ 60, so current prices are certainly very lucrative for American producers.
An overhang for the crude markets is the progress of negotiations with Iran, which so far have been slow. Barret says Iran will add about 1.4 million barrels a day of oil to the market if sanctions are lifted.
Regarding the tight supply in the market, which triggered the oil recovery, Barret says the world will need at least 5 million barrels a day of supply increase over the next year to maintain the balance of oil markets and stable prices.