The International Energy Agency (IEA) on November 17 raised its average Brent crude oil price projection for 2021 and 2022 but noted that the rally might ease off on improved supply. The Paris-based agency now expects Brent prices to average $71.50 per barrel this year, compared to $70.40 per barrel in its projection last month. By 2022, the prices are expected to average $79.40 per barrel, up from $76.80 in the previous outlook.
The IEA said higher prices had already prompted producers to boost output, with much of the uptick in supply coming from the US. Still, US crude production is expected to climb gradually and will unlikely return to pre-pandemic levels until the end of 2022. US producers and oil field service providers are grappling with shortages of workers, equipment, and vehicles, which prevented the country’s oil output from rebounding quickly.
The IEA said the global oil market remained tight, but a reprieve from the price rally might come rather soon. The agency said robust gasoline consumption and increasing international travel are underpinning oil demand, but an uptick in COVID-19 cases in Europe, higher oil prices, and slower industrial activity could dampen demand. The IEA maintained its projection for global oil demand growth at 5.5 million bpd for 2021 and 3.4 million bpd for 2022.
