OUT of the blue, the International Energy Agency (IEA) has started asking oil producing countries to pump more oil and continue investing in new oil fields. For the time being, it is not asking to switch to green energy or demanding any minimum or zero production; this indicates the inclination to stay with oil for some time. This request is coming at a time when the agency was pushing to switch away from oil, and with rulings from the European courts for reduced carbon emission. The same is happening with the shareholders of major international American oil companies in terms of the demand to go green and minimize oil and gas investment.
The focus is on the second half of this year, whereby demand for oil is expected to rise in view of the increased vaccination globally, which could push for demand for almost everything and open all countries globally. However, some hiccups could emerge from some countries or a new variant may appear. For now, the oil price is comfortably at $ 72 per barrel and likely to move up.
This will prompt OPEC-Plus to push for releasing more oils without any hesitation at any level. It is time to move forward with more volume and not be concerned about any fallbacks. OPEC and its partners have now learned their lesson and can build on it. The current oil stock is estimated to be below the five-year average, and the demand could reach 99 million by the end of this year. This of course depends on the on-target implementation of the vaccination campaigns in all countries with the help of American and other companies that manufacture the COVID-19 vaccines. Iran will definitely be on the map and aims to increase its current production from today’s 2.5 million to 4 million by the end of first quarter of 2022, provided there is progress in its relations with the USA, and how soon it can reach an amicable settlement, which is currently happening. Oil is on the right track … OPEC Plus is learning and adding new lessons to manage supply… And experts are eyeing a level of $80 a barrel. What is Kuwait going to do with better and improved oil prices? Anything!
By Kamel Al-Harami Independent Oil Analyst