The International Energy Agency has downgraded the forecast for oil demand in 2021. Global fuel consumption is recovering more slowly than expected due to the aftermath of the second wave of the coroanvirus pandemic and the reintroduction of lockdowns in several countries. In addition, experts point out a psychological factor: many people postpone long trips for fear of infection. However, the growth of global demand for energy resources can accelerate in the second half of the year due to large-scale vaccinations, analysts say. Given the completion of the OPEC + deal, this state of affairs may push the price of oil to $ 60 per barrel, which should have a positive effect on the state of the Russian currency and the budget.
The International Energy Agency (IEA) has revised its forecast for oil demand in 2021. As follows from the organization’s report published on Tuesday, December 19, by the end of this year, the consumption of energy resources in the world will increase by 5.5 million barrels per day – up to 96.6 million barrels per day.
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Note that back in mid-December, IEA experts predicted more confident growth rates in global oil demand in 2021 – around 5.7 million barrels per day. Meanwhile, as a result of the consequences of the second wave of the coronavirus pandemic, the agency downgraded its assessment.
According to Johns Hopkins University, since the beginning of winter, the number of detected cases of COVID-19 in the world has increased by more than 32 million and currently exceeds 95.8 million. Against this background, the authorities of a number of states are forced to introduce repeated lockdowns.
“It will take more time to fully recover the rate of consumption of raw materials. The renewal of restrictions negatively affects the volume of fuel sales. For this reason, we have lowered our forecast for oil demand, ”the IEA report says.
In addition, experts interviewed by RT point to the psychological factor of demand inhibition. According to the head of the analytical department of AMarkets Artyom Deev, even if the situation with the pandemic weakens, people in most countries will fear long-distance travel for some time.
“Against the backdrop of the pandemic and the massive closure of borders, people were forced to give up foreign travel. Today, many people are still afraid to travel and postpone travel for fear of infection. As the quarantine restrictions are lifted, the demand for fuel will grow, but it will take several years for the tourism and transport industries to fully recover, “Deev explained in a conversation with RT.
One of the determining factors for the global energy industry in 2021 should be large-scale vaccination of the population against COVID-19. This point of view in an interview with RT was expressed by an analyst at Freedom Finance, Valery Emelyanov. In his opinion, the massive use of vaccines can lead to a noticeable increase in the number of shipments in the world in the second half of this year.
“Due to the vaccination programs in the world the peak incidence will be passed. Moreover, summer will be the holiday season, which traditionally leads to an increase in the number of air and land transportation, which will also have a positive effect on fuel sales, ”the analyst said.
Although the coronavirus pandemic will continue to put pressure on the global energy market in the near future, demand for hydrocarbons will still grow faster than supply in 2021, Yemelyanov said. The analyst connects this state of affairs with the actions of the countries participating in the OPEC + deal.
Recall that within the framework of the agreement, the state – exporters of raw materials restrict oil production and thereby try to achieve a balance between the demand and supply of hydrocarbons in the world market. The policy of the parties to the deal should keep oil prices from further collapses.
Following the talks on January 5, the parties agreed to further reduce the production of raw materials in February and March by more than 1.4 million barrels per day. Global investors reacted positively to this decision of the alliance members, since much less raw materials will enter the global market than previously expected. Against this background, over the past two weeks, the price of Brent crude oil has risen in price by more than 10% and is now close to $ 55-56 per barrel.
“The OPEC + deal has already proven its ability to contain production volumes even in difficult conditions. The members of the alliance understand that rather high prices for raw materials are to be kept at the expense of compliance with the agreements, ”Valery Yemelyanov emphasized.
It is noteworthy that in the face of rising oil prices, IEA specialists do not expect a significant increase in shale production in the United States. According to the organization, this situation will allow the OPEC + countries, including Russia, to increase their share of the hydrocarbon market.
“Now American oil workers are constrained by the need to pay a third of the cash flow to shareholders, which forces them to work mainly to maintain the current level of production and postpone the investments necessary to increase production. This allows Russia and other OPEC + participants to increase their share in the oil market and at the same time maintain comfortable prices for raw materials, “Vitaly Gromadin, senior analyst at BCS World of Investments, explained to RT.
According to the expert’s forecast, in 2021 the average oil price will remain close to $ 55 per barrel. In turn, Valery Yemelyanov highly estimates the likelihood of growth in quotations to $ 60-61 per barrel.
For the benefit of the ruble and the budget
The observed recovery in oil prices should play in favor of strengthening the Russian currency, Valery Yemelyanov believes. According to him, in the absence of global economic shocks, the rise in prices for energy resources may lead to a fall in the dollar rate to the range of 68-75 rubles. At the same time, the analyst admits a decrease in the indicator to 65 rubles during the year.
At the same time, an increase in the cost of oil will make it possible to quickly reduce the negative difference between revenues and expenditures of the Russian treasury, Artyom Deev is sure. According to him, even if the current price level is maintained, the country’s budget deficit by the end of the year may be reduced to 1.5% of GDP instead of the 2.5% expected now.
Note that for 2021, the Russian budget provides for the base oil price at $ 43 per barrel. Within the framework of the budget rule, if commodity quotations fall below this mark, the lost oil and gas revenues are compensated by means of the National Welfare Fund (NWF). If the cost of raw materials on the market is higher than this indicator, the excess profits, on the contrary, are directed to the NWF.
“If we proceed from the current situation in the world energy market, then by the end of the year, prices for raw materials will remain within $ 55 per barrel. At the same time, oil prices, being above the cut-off mark within the framework of the budgetary rule, allow replenishing reserves, which has a positive effect on the country’s financial stability, “Deyev concluded.
Source: RT на русском by russian.rt.com.
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