- are the supply and demand fundamentals that have governed oil markets for decades coming unstuck?
- investors’ growing climate concerns are keeping a lid on production growth at oil companies that are answerable to shareholders
While the recent oil price rally has lost steam amid a surge in Covid-19 cases from the Delta variant, the International Energy Agency has kept its forecast for global oil demand growth over the next year largely unchanged says an article on CNN.
To increase oil production
Just two days after the Biden administration urged swift action to move towards a low-carbon economy, US National Security Adviser Jake Sullivan appealed to OPEC+ to increase oil production in order to curb rising gasoline prices.
Pressure on oil companies
The glaring contradiction highlights an uncomfortable fact: the world still needs oil. But there is growing pressure on major oil companies to ditch fossil fuels, and US producers are laden with debt.
Supply to remain tight
That leaves Saudi Arabia, Russia, and their OPEC+ alliance, which is taking a cautious approach and slowly unwinding production cuts despite a 60% surge in the price of Brent crude over the past year. That means supply could remain tight over the coming months.
Oil demand to grow
At the same time, demand has been rising. While the recent oil price rally has lost steam amid a surge in Covid-19 cases from the Delta variant, the International Energy Agency has kept its forecast for global oil demand growth over the next year largely unchanged.
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Source: CNN
