Bank of America has revised its forecast for the price of Brent crude in 2022 from $ 55 to $ 60 per barrel amid expected growth in demand, according to the bank’s review.
“Given the decline in inventories, tight control over reserve capacity by OPEC + and the expected growth in demand, we are raising our long-term forecast (for 2022) for Brent oil prices from $ 55 to $ 60 per barrel,” TASS quotes the words from the review.
The bank recalled that in early March, the OPEC + countries made an unexpected decision regarding the recommendations for oil production levels for April 2021. Despite the fact that the initial agreements made it possible to increase production by 1-1.5 million barrels per day (bpd), it was decided to maintain the current production level. An exception was made for Russia and Kazakhstan, which can increase production by 150 thousand b / d. At the same time, Saudi Arabia will continue to voluntarily further reduce production by 1 million bpd.
According to Bank of America analysts, OPEC + will go to increase production only in 6-9 months. Despite the fact that the peak in oil consumption can be passed as early as 2030, in the next five years its cost will be relatively high, the bank believes. The reason is both in the restrictions on the part of OPEC + and in support of demand. “We expect a window of strong oil demand to emerge over the next three years, with consumption growing at the fastest pace since the 1970s,” analysts said.
Experts expect a possible repetition of the “super cycle”, in which oil prices will rise above $ 100 per barrel, the bank says. The point is that in recent years, oil companies have sharply reduced their capital investments against the background of expectations of the development of alternative energy. However, government programs to support the economy to overcome the consequences of the pandemic will help increase oil demand. As a result, the market may face a shortage of oil before the time comes when it is not needed, according to Bank of America.