When the corona pandemic seriously paralyzed the world economy last spring, oil prices fell like a rock.
Since then, the price has risen sharply again, and now more and more experts believe that prices can reach astronomical levels.
Record high price
At the moment, the price of a barrel of North Sea oil is 73.50 dollars.
According to a recent report from the US major bank JPMorgan, the price could be as high as 120 dollars next year, while the following year, in 2023, it can reach as high as 150 dollars a barrel.
That is more than double from the current level. Should JPMorgan be right in its estimates, the oil price will reach a historically high level. On July 11, 2008, the oil price was at its highest level to date, at $ 147.02 a barrel.
JPMorgan justifies the prediction by saying that OPEC has nowhere near the power to counteract the high oil prices that people believe.
– They do not have the barrels. It’s an aerial mirror, says Christyan Malek, head of oil and gas research at JPMorgan to CNN.
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The problem is that even though there is more than enough oil waiting to be picked up, the Opec countries do not have the capital or logistics to deliver oil fast enough.
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Small reserve capacity
Opec’s reserve capacity, a calculation of how many barrels of oil can be quickly delivered to the market, will be only two million barrels next year, according to the major bank. That’s less than half of what many on Wall Street assume it is.
The reserve capacity accounts for only 4 per cent of the total capacity, a decrease from the 14 per cent between 1995 and 2020, and well below the level considered comfortable, 10 per cent.
When this capacity becomes so low, oil prices can skyrocket.
– Look at the story. When we are in a scenario where the market thinks: “Oh damn, we do not reserve capacity”, that is when prices become unusually high, says Malek.
The fear is that one is just a shock away from not being able to meet the oil demand, whether it is a war, a natural disaster or another disruption in the supply chain.
The US Federal Reserve does not believe that the oil price will stay at 150 dollars for very long. They believe that the average price in 2022 will be $ 88, and in 2023 $ 82.
The projections come at the same time as the new corona mutation, omnikron, has begun to spread, which sent oil prices down. JPMorgan believes it will not have a major impact on prices, as OPEC will probably adjust oil production.
– The oil era is over
– Seems loud
JPMorgan is by no means alone in envisioning high oil prices. Three weeks ago, Bank of America warned that the oil price could make a dent in the next six months, ending up at $ 120.
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This is exactly in line with JPMorgan’s estimates for next year, and will in itself be a sharp rise in prices.
“Prices are very easy to shoot up when demand conditions are as tight as they are now,” said Francisco Blach, head of global commodities at Bank 0f America.
The estimates for Bank of America were met with a certain amount of skepticism among Norwegian experts, who nevertheless opened up that there was a real possibility that they could rise quite sharply.
– It seems loud, but it can not be ruled out. If you look at the movements on natural gas and coal in recent months, we have seen prices that go far beyond what was thought possible, said senior oil analyst at Arctic, Ole-Rikard Hammer, to Børsen.
He was, like JPMorgan, in that in the short term it is the stock levels that form the basis for the oil price.
“Inventory levels have come down to such low levels that it is more difficult for the market to handle unforeseen events,” Hammer said.
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The IEA wants the price down
Here at home, the high oil price will hardly mean anything other than that government revenues increase. Fuel is highly taxed, so fluctuations in oil prices do not have a major impact.
Then the case is quite different in the US, where the oil price has a direct effect on the pump price. This is a concern for Joe Biden because it affects consumers. For the poor Americans, energy is a very large part of the expenses.
As recently as last week, the International Energy Agency (IEA) called on OPEC and its allies to take the necessary steps to bring oil prices down to a “reasonable level”.
“I very much hope that in the next meeting or meetings they will take the necessary steps to help the global oil market and help bring prices down to a reasonable level,” said IEA chief Fatih Birol, according to NTB.
The OPEC countries and their allies are in the process of increasing production monthly to the level that was before the corona pandemic started, but have rejected a faster increase.
On Thursday, a new meeting will be held between the OPEC countries and their allies, a meeting that will be followed with an arguing eye and which could have a major impact on oil prices in the future.
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