Oil prices retreating to below $ 60 per barrel in 2022, analysts at Mitsubishi UFJ Financial Group (MUFG), one of Japan’s largest banks, predict, or even rallies up to $ 200, as the energy minister of a Gulf oil producing country warned?
There is a difference on the outlook, and a lot, even if the second hypothesis is decidedly extreme.
In a weekly report dedicated to the oil market, the Japanese giant wrote that it believes that the increased production by OPEC, the resumption of shale gas production in the United States and the possibility of Iranian oil returning to the market could bring Brent Crude prices down from $ 75 a barrel in the second quarter of 2021 to $ 73 a barrel at the end of the third quarter, and further to $ 64 a barrel at the end of the fourth quarter.
For 2022, the bank estimates that Brent will return to fluctuating around $ 58 a barrel, thus below the psychological threshold of $ 60.
“Behind ours narrativa bearish on oil prices, there is the belief that attention will shift from demand – whose profile is increasingly normalizing, returning to pre-Covid levels – on ahighest bid, which will come with higher production from OPEC + (alliance between OPEC and non-OPEC countries such as Russia); with the eventual return of Iranian barrels and with the gradual increase in the production of US shale gas “, reads the report di MUFG.
Alert Oman against AIE roadmap for zero emissions by 2050
In the same hours in which the made in Japan report was released, the article in question reports, the disturbing alert arrived from Mohammed al-Rumhi, Minister of Oil and Gas of Oman, which warned that, should oil producers decide to follow the advice of the International Energy Agency – those that, in order to reach the zero emissions target by 2050, companies should never again carry out any investment in oil and fossil fuel supply projects – oil prices they could fly up to $ 100 or $ 200 a barrel.
“To recommend that we no longer invest in oil …I think it is extremely dangerous – Rumhi said during a conference on energy transition organized by the agency and Oman.
It was in fact the same international agency, last May, to recommend to oil producing countries to stop investing in new projects related to fossil fuels, when it released a report on May 18. “Net Zero by 2050: a Roadmap for the Global Energy Sector”.
In the report it has been illustrated precisely the roadmap for the global energy sector to bring global carbon dioxide (CO2) emissions to net zero by 2050 and give the world the opportunity to limit the global temperature rise to 1.5 degrees.
Among the more than 400 milestones listed in the analysis to arrive at zero emissions by 2050, there is precisely the one that suggests not investing in new fossil fuel supply projects.
READ THE IEA REPORT (AIE in Italian)
Rumhi continued:
“If we stop investing in the fossil fuel industry abruptly, the world will end up being starved of energy and prices will simply shoot up. In the short term, we may also see a price scenario materialize at $ 100 or $ 200 a barrel“.
It should be noted, to have a yardstick, that the latest outlook of the EIA (division of the US Department of Energy), Short-Term Energy Outlook issued on Wednesday, forecasts that Brent prices will average around $ 71 per barrel in the fourth quarter, before falling to the annual average of $ 66 per barrel in 2022, due – as the Japanese bank’s analysts believe – to the increased production of OPEC +, the increased production of shale gas and a further supply from other non-OPEC countries. A decidedly less disturbing scenario.