Economic Recovery: Oil prices to strongly rebound from COVID-19-polls

By Uthman Salami

A poll conducted by Reuters on Tuesday has indicated that oil prices will experience a gradual upward change this year.

This projection was hinged on three major variables namely; economies recovery as well as positive light from the coronavirus crisis in India and a potential return of Iranian supply.

The poll suggested that 45 participants forecast that Brent would average $64.79 per barrel -the sixth straight upward revision in the 2021 consensus up slightly from April’s $64.17 projection.

The benchmark has averaged $63.52 so far this year.

Carsten Fritsch, an analyst, said.”In the second half of the year, the market threatens to slip into a significant supply deficit as global oil demand should pick up strongly.”

Global demand was seen growing 5-7 million barrels per day in 2021, however, concerns were strive over shrinking consumption in the world’s third-largest consumer India who have been rueing from a second COVID-19 wave. Some analysts believed the impact might be limited.

A research expert, Hetal Gandhi, said “we do not expect any significant decline (in prices), as fall in demand from India would be offset by an increase from countries like the U.S. and China.”

Iran and global powers have been negotiating since April to lift sanctions on Tehran, including its energy sector.

Any increase in Iranian supply will top barrels of productions already expected from OPEC, which plans to bring back about 2 million bpd through July.

Most analysts expect OPEC to stick to the existing strategy of gradually easing supply curbs during its meeting on Tuesday. The poll forecast U.S. crude to average $61.68 in 2021 versus $61.01 in April.