By Adedapo Adesanya
Crude oil prices appreciated on Friday after the International Energy Agency (IEA) advised the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) to boost supply to the market.
In its monthly report, the Paris-based IEA said oil demand is expected to exceed pre-coronavirus levels by the end of 2022, urging the world producers to open the taps.
Consumption declined by a record 8.6 million barrels a day last year as coronavirus raged around the world. It is expected to rebound by 5.4 million barrels per day this year as vaccines are rolled out and countries open up again.
In 2022, the IEA expects a further 3.1 million barrels per day increase, to average 99.5 million barrels per day with an increase at the end of the year that will surpass the level of demand before the coronavirus crisis took hold.
“OPEC+ needs to open the taps to keep the world oil markets adequately supplied,” it said, adding that rising demand and countries’ short-term policies were at odds with the IEA’s call to end new oil, gas and coal funding in a stark report issued last month.
“In 2022 there is scope for the 24-member OPEC+ group, led by Saudi Arabia and Russia, to ramp up crude supply by 1.4 million barrels per day (bpd) above its July 2021-March 2022 target,” it said in the oil report.
This information pushed the price of the Brent crude higher by 17 cents or 0.23 per cent to $72.69 per barrel and expanded the value of the West Texas Intermediate (WTI) crude by 62 cents or 0.88 per cent to $70.91 per barrel.
The latest update from IEA is coming after it earlier sent fears across the energy industry with its Net Zero by 2050 report on May 18, saying investors should not fund new fossil fuel projects if the world wants to reach goals on reining in emissions causing rising temperatures by mid-century, a warning that affected the market’s optimism.
It, however, clarified that oil demand looks set to continue to rise, underlining the enormous effort required to get on track to reach the stated ambitions.
The market also retained its bullish stance as the US investment bank, Goldman Sachs said it expects Brent crude prices to reach $80 per barrel this summer as vaccine rollouts boost global economic activity.
