Dr Nakhle first mentioned that the growth in oil demand is mainly driven by economic “recovery” as vaccination for Covid-19 is being rapidly deployed around the world, though it remains uneven. In addition, the growth was already expected in the summer as travel restrictions are eased and fully vaccinated people are allowed to roam more easily around. The tricky question is, however, will the picture during the fall and winter seasons stay the same?
Dr Nakhle also reminded that OPEC+ continues to sit on nearly 6 million barrels a day which are supposed to find their way into the market between now and spring next year. However, the latest spat within the group, particularly the UAE’s stance against an extension of the April 2020 deal under the current terms beyond April 2022, has created a level of uncertainty and increased the fears of a tight market. Outside of OPEC+, US shale production is creeping up but hasn’t fully recovered yet, and Iranian oil is still awaiting a deal with the US. In short, a limited supply and growing demand is fueling the fear of a tight oil market.
“Global Economy and Energy Markets Weekly Commentary – 11th Jul ’21“, Christof Rühl, Jul 2021
“Aramco’s plans to sell more stakes in its assets and OPEC+’s way forward“, Christof Rühl, Jul 2021
“UAE-Saudi infighting over production quotas“, Dr Carole Nakhle, Jul 2021
“The way forward for OPEC+“, Dr Carole Nakhle, Jul 2021