The price of oil runs, runs. Brent this morning broke the $80 barrier, returning to the levels of 2018, before the slowdown imposed on economies by the explosion of the pandemic. But the experts are convinced that the quotations are destined not to stop there: the goal of 90 dollars will be reached within a few months, perhaps before the end of the year, assures Goldman Sachs. And it is a widely shared opinion among the major crude oil merchants, from Trafigura, who has just renewed the agreement that guarantees him control of Angolan crude oil, to Vitol, the largest independent operator on the market, very close to the Russian giants.
Says Chris Bake, Head of Trading: “The market has changed profoundly compared to a couple of months ago. Demand from economies has grown but, above all, the prices of potential oil competitors have risen, natural gas in the lead”. Furthermore, winter is upon us which will lead to a new increase in consumption, up to one million barrels per day or even more, if the season is inclement. Hence the prospect of new increases with inevitable repercussions on inflation. Also because the increase in crude oil follows that of the consumption of raw materials, which is recovering with the end of the pandemic.
A partially predictable phenomenon, but which, due to its size, caught off guard economies and governments engaged last summer in the search for replacements for fossil energy to be used already in the near future, not after 2030. An ambitious goal, perhaps too much so that has prompted the protagonists to underestimate the effects of the end of the Covid -19 emergency. Driven by the search for alternative sources, the big players in the market, starting with Big Oil, have slowed down investments in new research by directing activity towards trading, following the example of Shell which has just sold its shale oil wells to Conoco.
Meanwhile, both due to the devastating effects of hurricanes in the US and the Gulf of Mexico, and due to the financial crises and political risks that have held back investments in countries such as Nigeria or Mozambique, it is finding it difficult to distribute the crude oil supply of some producers. Only a drastic resumption of production by OPEC +, well beyond the 400 barrels agreed by the cartel for the coming months, could alleviate the hunger for crude oil that threatens the recovery of the global economy. At the appeal, according to experts, at least 500 barrels are missing. But the calculation is complicated by the logistics deficiencies that are affecting the recovery, starting with the dramatic situation of some industrial lungs of China, forced to stop due to the lack of natural gas and coal.
Therefore, it is not excluded that the race could continue towards new highs, especially if other sectors, such as air traffic, return to normal. It will be a matter of seeing, at that point, how the central banks will react.
