Home Business IEA: Need at least 5 mn bpd of supply in the next 1 yr to meet the expected increase in demand – Times Now

IEA: Need at least 5 mn bpd of supply in the next 1 yr to meet the expected increase in demand – Times Now

by Bioreports
iea:-need-at-least-5-mn-bpd-of-supply-in-the-next-1-yr-to-meet-the-expected-increase-in-demand-–-times-now

Oil

(Representational Image)&nbsp | &nbspPhoto Credit:&nbspGetty Images

Key Highlights

  • Barret says demand is not very far from pre-pandemic levels and that we should hit 2019 crude demand levels by the end of this year
  • The market is 1.5 mn bpd short of having a completely balanced market by the end of the year and this shortfall can easily be covered up for by OPEC producers according to Barret
  • When asked for a crude range or forecast, he says one must look at the US to gauge the expected levels

Mumbai: Amidst the commodity complex carnage, crude managed to restrict the losses to just a little over 1%. It stayed steady neat the $71/bbl mark. The last few days have seen a massive run up in crude, triggered by the IEA report that points to a tight crude oil market. 

Christophe Barret , Senior Oil Market Analyst, IEA says that April, May economic activity has picked up very fast and that mobility indicators show that demand accelerating very fast in US, EU.

“Vaccinated countries are showing very strong demand rebound”, says Barret. Going forward, Summer could see exceptionally high demand in US, EU

Barret says that we are not very far from pre-pandemic crude demand levels “We should see demand going back to 2019 levels by Q4CY22, Gasoline demand is already very close to where it was in 2019”, Barret. 

So amidst the surge in demand, what does the supply picture look like. Barret says that the supply currently is enough to meet demand through the Summer, though post Summer, the picture will change. “OPEC+ committed to increase supply by 2 mn bpd through July andNon OPEC supply could increase by 1 mn bpd but we need additional Crude supply from OPEC as they have plenty of spare capacities yet”

Barret says a big portion of th 1 mn bpd oil production from non OPEC producers will come from the US. “US drillers have been slow in bringing production online but with current prices US producers should come back and even start investing.”

US Drillers make profits when crude is at $50-$60 so the current prices are definitely very lucrative for US producers.

One overhang for the crude markets is progress on Iran negotiations which has so far been slow. Barret says that Iran will add around 1.4 mn bpd of oil to the market if sanctions are lifted. 

On supply tightness in the market, which has triggered the rally in oil, Barret says that the world will need at least 5 mn bpd supply increase in the next 1 yr to keep oil markets balanced and prices stable.

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