Brent crude, the world’s largest benchmark for oil pricing, will likely average close to $50 a barrel this year as countries grapple with the logistical challenge of rolling out the vaccines required to suppress the COVID-19 pandemic, the annual Gulf Intelligence Global Oil Survey of 1,000 industry stakeholders reported.
In a same-day poll conducted yesterday across Asia, the Middle East, Africa, Europe and the US, 48 percent of respondents identified $50 as the most likely outcome for Brent this year, while more than a third of those polled, 37%, were a little more optimistic on their outlook for economic recovery and see oil rising to average close to $60 a barrel in 2021.
The early phases of the vaccination effort across Europe and the US were designed to put the highest-risk people at the front of the line, but the pace of inoculations has stalled due to the small number of available vaccination centers, the narrow demographic currently approved and other logistical challenges. Brent crude oil averaged around $42 a barrel in 2020 after OPEC+ cut supply by close to 10 million barrels a day.
The market’s ability to handle more oil supply in this year will “depend on the vaccine rollout. There are plans in many countries to vaccinate a good percentage of the people by the first quarter. If that happens and we see a demand recovery, then I think the market can absorb more,” HE Suhail al-Mazrouei, UAE Minister of Energy & Infrastructure, told Gulf Intelligence in an interview.
In December, the International Energy Agency cut its 2021 global oil demand growth projection to 5.7 million barrels a day after new lockdowns and travel restrictions were introduced in Europe and the US, which it expects to remain in place until Covid-19 vaccines are widely available.
Much of the second half of 2020 oil prices were caught in a battle between glass half-full sentiment and glass half-empty reality, swinging in both directions on a week-by-week basis and stuck around $40 a barrel for many months. The optimistic outlook that came with the announcements of a series of vaccines towards the end of 2020 allowed the oil markets to break out and move into the $50s. Brent crude oil futures are trading above $55 a barrel in Asia this morning, while the U.S. benchmark, West Texas Intermediate, is above $52 a barrel.
The OPEC Secretary-General Mohammad Barkindo told Gulf Intelligence that oil exporters group is not focused on price. “We are focused on returning this market to stability, which had alluded us for most of 2020 to the detriment of not only we producers but also consumers, and by extension the global economy,” Barkindo said in an interview with Gulf Intelligence.
The Gulf Intelligence Global Oil Survey 2021, which is conducted every January to garner the pulse of those tasked with managing the international energy industry, showed that there was small number of 7% who still see a risk of prices dropping back to $40, while a bullish 7% forecasting a price of $70 this year.
