After stabilizing, oil seems to be entering a stronger phase or maybe its learning to live with the pandemic; not exceptional, but oil prices have been on an upwards trajectory in 2021 versus 2020 gaining over 30 percent. Globally, analysts have raised 2021 oil price forecast in general, which isn’t surprising as the world is eyeing improved global oil demand this year versus the 2020 as countries come out of COVID-19 restrictions despite the third wave surge in three oil consuming countries.
The indicators for a moderate growth prospect in oil demand are coming from all corners. Crude oil output in the United States has been up and the expectations for non-OPEC+ output is a growth of over 600,000 barrels a day in 2021. Though this increase is only half of the decline faced in 2020, it is the rebound in output that is holding optimism in the oil world. The EIA hasn’t changed its outlook for oil demand in 2021 as India battles its worst covid surge; however, it has upped its global oil demand growth for 2022. IEA is also upbeat for oil demand in the second half of 2021, mainly on Covid recovery hopes where the infection in India is likely to taper and the pandemic to come under control globally through vaccination campaigns around the world.
OPEC expectation is also of a strong recovery in world oil demand in 2021 with demand from China and the United States counterbalancing the decline occurring in India due to the coronavirus crisis. Saudi Arabia – the leader of the pact has started experiencing export boom after a year of weak demand and intense volatility in the oil market during the 1.5 years of the ongoing pandemic.
Amid the cautious optimism, the OPEC+ meeting happening today is also likely to not increase the pace of production cuts further but stick to the group’s existing plan of gradually easing oil supply restrictions amid the oil demand recovery and the likelihood of Iranian oil making inroads again.