Energy security omens returning to haunt oil market, says an article on S&P Global.
Energy Security Concerns
Energy security concerns are bubbling beneath the surface as the global oil market seems to be entering into the early stages of recovery from the pandemic.
While OPEC+ can provide the necessary crude as demand recovers in the near term, there may be a lack of firepower from the rest of the oil-producing fraternity further down the line.
But the recent rise in oil prices could be just what the world needs.
Oil prices to increase
Dated Brent, the global physical oil benchmark, has recently been hovering in the low-to-mid $60s/b, having risen more than 50% since demand-led optimism over the COVID-19 vaccine rollout back in November. And oil prices could shift higher again once the market shakes off the latest bout of coronavirus jitters.
S&P Global Platts Analytics predicts oil prices will climb above $70/b around mid-year as improved supply-and-demand fundamentals starting in May lead to substantial stock draws through to August.
While large oil-consuming countries such as India may crank up the volume over their displeasure and many OPEC+ countries may be eager to ditch compliance to their production-cut deal or push to pump more, both consumers and producers alike may want to consider the benefits should oil prices stay in their arguable sweet spot.
While the warning signs over a supply crunch in the coming years are well documented, they have been overshadowed by the pressing needs of consumer economies ravaged by COVID-19 and producer countries crippled by low oil prices. But these very low oil prices along with the energy transition push have accelerated supply concerns.
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Source: S & P Global
