From OilPrice.com:
Excitement as oil prices anticipated to hit the $90-$100 per barrel range in the second half of this year as global demand is set to reach record levels amid constrained supply, Russell Hardy, CEO at the world’s largest independent oil trader, Vitol Group, told Bloomberg Television on Monday.
“The prospect of higher prices in the second half of the year, in the sort of $90-$100 range, is a real possibility,” Hardy told Bloomberg in an interview.
According to Hardy, global oil demand will rise by 2.2 million barrels per day (bpd) in 2023 compared to 2022 and will reach a record level, driven by a jump in diesel, naphtha, and liquid petroleum gas (LPG) demand.
“You don’t have much room on the supply side is the reality, so the potential for a rally is certainly there,” Hardy told Bloomberg.
Peak oil demand is expected to come around the end of this decade amid rapid decarbonization, but investment in oil supply will still be needed, Vitol’s top executive said.
Major U.S. shale operator Pioneer Natural Resources also sees $100 per barrel by the end of the year, while some banks are not convinced prices will hit triple digits in 2023.
With a significant pickup in Chinese demand, Brent Crude prices “will break $90 this summer and climb back up to $100 sometime in the second half of the year,” Pioneer CEO Scott Sheffield said earlier this month.
Brent Crude oil prices are not expected to reach $100 per barrel in 2023 unless a major geopolitical event rattles markets again, JPMorgan said this month.
Russian crude oil production is expected to recover by June, while high price levels would prevent the U.S. from repurchasing crude to refill the Strategic Petroleum Reserve (SPR), according to the Wall Street bank.
Goldman Sachs, for its part, still expects Brent Crude to hit $100 per barrel this year, but only in December, compared to earlier expectations of $100 oil as soon as mid-2023. Earlier this month, Goldman Sachs cut its average Brent price to $92 a barrel this year from $98.
Despite the cut in oil price forecasts, Goldman Sachs is still one of the most bullish Wall Street banks on crude oil and commodities in general. Goldman continues to believe that there is a new supercycle in the making.
By Tsvetana Paraskova for Oilprice.com
Why are high oil prices great for the energy industry?
High oil prices can be perceived as good for the oil industry and some stakeholders, but they often have negative implications for consumers, like you, who pay more at the gas pump.
Here’s why high oil prices can be seen as positive for the energy industry:
Oil Industry Profits:
When oil prices are high, oil-producing companies and oil-exporting countries tend to make higher profits. This is because they can sell oil at a higher price per barrel, leading to increased revenues. As a result, the stocks of oil companies may perform better, and countries heavily reliant on oil exports may see improvements in their economies.
Investments in Exploration and Production:
High oil prices can incentivize oil companies to invest more in exploration and production. They may undertake projects that were previously considered economically unviable when oil prices were lower. This could potentially lead to the discovery of new oil reserves and increase the overall supply of oil in the long run.
Support for Energy Transition:
Paradoxically, high oil prices can indirectly support the transition to renewable energy sources. As consumers face higher costs at the pump, they might become more motivated to seek alternative, more fuel-efficient transportation options or consider electric vehicles, thus reducing their long-term dependence on oil.
