What will happen to oil in 2022: expert opinions

2024 Author: James Gerald | [email protected]. Last modified: 2023-12-17 14:00

Oil prices are an indicator of the state of the world economy, socio-political stability in the world. The synergy of all these processes, the ability of the main oil-producing countries to negotiate with each other in order to regulate prices for "black gold", determine the cost of a barrel. Consider what will happen to oil in 2022, according to experts from different countries.

Main forecasts for the dynamics of the oil market development

In April-May 2020, the price per barrel of oil fell to negative levels - around 38 cents. According to experts, this might seem like a fantasy, but such were the economic realities. The situation has developed primarily as a result of a sharp slowdown in economic development due to the pandemic. The second reason is the oil trade war between the Russian Federation and Saudi Arabia, which went to an unprecedented dumping on oil prices. Oil-producing countries found themselves in a difficult situation, they all lost income, so they had to negotiate. In the face of reduced consumption, it was necessary to reduce production volumes.

OPEC + countries have signed an agreement to cut production by 25% to stabilize the oil price until 2021. Reducing production, partially overcoming the crisis after the pandemic, primarily China's withdrawal from it, made it possible to stabilize the price per barrel. In August 2021, a price corridor of $ 67.4-79.5 per barrel is planned. Since the beginning of 2021, the OPEC + countries have come to a consensus that they will raise the base quotas by half a million barrels per day.

Interesting! When is the Day of Family, Love and Fidelity in 2022

Key oil price forecasts are split:

• prices will continue to rise in 2022;
• the price will stabilize and drop slightly.

Both scenarios are based on an optimistic forecast for countries to recover from the economic crisis after the pandemic, stabilization and growth in macroeconomic indicators.

Argumentation of experts in favor of different forecasts of oil prices

Analysts who are guided by an increase in the price of a barrel of oil to $ 100, assume an inflow of investments in the oil-extracting and processing industries. This is a controversial argument, since the oil industry has not yet reached pre-pandemic production volumes. The second argument that experts cite in favor of increasing the cost of a barrel is the partial devaluation of the dollar due to its significant emission during the pandemic. There is one significant indicator that supports the opinion of a possible rise in oil prices up to $ 100. For December 2022, options (purchase of securities for chartered volumes) for the WTI benchmark oil pass at a price of $ 100, more than 60,000 contracts have been concluded.

More convincing, according to most experts, including Russian analysts and the Energy Information Administration (EIA), an independent agency under the US Department of Energy, would be the forecast that after oil prices stabilize, there will be a correction and decline. The EIA is targeting a cost of $ 67 per barrel, the World Bank - $ 56 (at the end of 2021). The forecast of income from the sale of oil in the Russian Federation in the budget is made on the basis of a price of $ 60 per barrel. So, when asked what will happen to oil in 2022, according to experts, one can answer that the price will vary between $ 56-67.

Interesting! When is the Medical Day in 2022 in Russia

The following factors can play in favor of price reduction:

• expansion of shale oil production in the USA and Canada - it becomes profitable after the mark of $ 50 per barrel;
• the sale by China and India of part of the strategic reserves accumulated during the period of the critical fall in prices;
• disagreements over production quotas between the UAE and Saudi Arabia;
• an increase in production quotas in the countries that are members of the OPEC + association.

The recovery of economic growth rates in many countries after the pandemic is proceeding at a rather slow pace; it is possible that a new "black swan" will appear in the form of a more aggressive strain of coronavirus. This risk fact must also be taken into account.

The latest news cites the words of Deputy Prime Minister A. Novak that the volume of production will be equal to the pre-crisis level only in May 2022. Additional income should be 400 billion rubles.

Outcomes

According to experts, the question of what will happen to oil in 2022 remains debatable. The cost of a barrel of oil is influenced by a large number of factors: from geopolitical layouts, the level of global economic growth to unpredictable factors such as the further development of a pandemic on the planet.

Most analysts tend to think that after an increase in oil prices, it will first stabilize and then fall by about 20%. The high rise in oil prices is beneficial to the producing countries, but it adversely affects the economies of the importing countries, since it leads to an increase in prices for all types of goods and an imbalance in macroeconomic indicators.