Silva announced his farewell on Monday in an emotional video message on Chelsea's website
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Oil prices are forecast to average $60 per barrel in 2021 with Iran’s potential return to the oil market remaining a key factor in 2022 even as inventories keep rising above a five-year average, market experts said.
Analysts at the Institute of International Finance said global oil inventories would edge up in the second half of 2021 supported by the rise in US and Opec+ production as Saudi Arabia’s voluntary cut may not be renewed.
“We see global oil inventories rising supported by the gradual recovery in oil supply. On April 1, Opec+ agreed to gradually increase production over the next three months, with the view to restore a quarter of the production cuts agreed a year ago in response to the pandemic,” said the Washington-based IIF.
“We are keeping our oil price forecast unchanged at $60/bbl for 2021. We do not expect global oil demand to recover to pre-pandemic levels of around 100 mbd until mid-2023 at the earliest,” said Garbis Iradian, IIF chief economist, Mena.
Oil prices have been under pressure even as the American Petroleum Institute (API) reported a build in crude oil inventories of 3.910 million barrels for the week ending March 26. Analysts had predicted a much smaller inventory build of 107,000 barrels for the week. The IIF said in its latest report that global oil supply would be exceeding demand and oil prices moderating for the rest of this year.
“We expect production cuts by Opec+ to ease in May as Saudi Arabia’s voluntary cut may not be renewed. Another threat to the oil market is the likely significant increase in Iran’s oil exports in the second half of this year. We expect the Saudi economy to cope well with an average oil price of around $60 per barrel, which would keep the fiscal deficit modest. Its fiscal breakeven oil price for 2021 is $66 per barrel, and lower government spending has decreased medium-term fiscal vulnerabilities to lower oil prices,” said Iradian.
The IIF noted that Iran is reported to have already increased its oil exports, particularly to China. The Biden administration would rejoin the 2015 nuclear agreement with Iran and other world powers, on one key condition: “If Iran returns to strict compliance with the nuclear deal”. If such an agreement is reached by July of this year, Iran could raise its oil production from 2.15 mbd in Q1 2021 to 3.8 mbd by Q4 2021; while it is a member of Opec, it is not bound by the current supply deal. Moreover, currently higher oil prices started to stimulate the shale sector, which could lead to higher production and keep a lid on the price recovery, the report said.
Prices for Brent oil, the international benchmark, averaged $62.5/bbl in the first quarter of 2021, up $20/bbl from the average for 2020. While rising oil prices continue to reflect gradual recovery in global demand, they were also supported by temporary supply limitations due to Saudi Arabia’s January decision to cut production by an additional one million barrels per day (mbd) in February and March.
Other factors behind the temporary supply limitations include Opec+ extension of existing production cuts and Saudi Arabia’s pledge to extend its voluntary production cut through end-April. Another factor is the disruptions of US Gulf Coast oil production in January and February due to extreme winter weather conditions in Texas, where wellheads and processing facilities are vulnerable to the effects of extremely cold weather. “More recently, the Suez Canal blockage, which backed up shipments of about 13 million barrels of crude oil and petroleum products at the entrances of the canal. These temporary factors have contributed to a significant global petroleum inventory drawdown so far this year,” the IIF said.
— issacjohn@khaleejtimes.com
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