Oil prices have surged recently on a stronger demand outlook. As natural gas shortages become more acute in Europe and begin to spread globally, substitution effects are driving higher demand for oil and coal. Price risks are tilted to the upside until mid-2022, so businesses should begin building scenarios around higher energy prices into their 2022 strategic plans.
Our analysts are constantly evaluating changing market trends to ensure you have the most updated and relevant information for your strategic decisions. Keep reading for our analysis of the key trends in oil that you need to pay attention to.
Supply growth remains weak, though OPEC has adequate spare capacity: Despite relatively high oil prices, US shale investment has not yet shown strong investment growth. Output growth is expected to grow across 2022, putting pressure on prices toward the end of 2022. Weak US growth has put OPEC in the driver’s seat, and OPEC has used its market power to restrict supply to markets, keeping prices elevated across 2021.
Demand remains relatively weak due to ongoing restrictions to international travel across APAC: Though much of the world will allow international travel, international travel volumes are not expected to recover to pre-COVID levels for several more years. This is particularly clear for APAC, which continues to restrict international travel heading into 2022.
FrontierView combines world-class strategic market intelligence and analyst advisory services through data, insights, and analytical tools, to power your business decisions. We offer a solution that puts the right information at the right time, at your fingertips. Click here to request access to the full Global Outlook for 2022. You can also download our free mobile app to stay ahead of developments and trends to enhance your performance in must-win markets. Available on iOS and Android.