Oil price could rise to $125 per barrel in 2022, warns US bank JP Morgan
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Crude oil could cost as much as US $150 per barrel by 2023
US bank JP Morgan, in a new report, has revealed that the oil prices could surge by 66 per cent in 2022, which is US $125 per barrel. Crude oil could cost as much as US $150 per barrel by 2023.
As per Christyan Malek, JP Morgan's head of oil and gas research, the main issue is that the OPEC nations have plenty of oil, however, they don't have the logistics to deliver it quickly.
JP Morgan estimates that OPEC's real spare capacity stands at 2 million barrels per day next year. The American bank said that OPEC's spare capacity equates to 4 per cent of total capacity. This is a decrease from an average of 14 per cent between 1995 and 2020. When this amount gets even lower, oil prices will surge.
Oil prices have hit a low in the past few days due to the new Covid variant - Omicron. Investors have been fearing that if a lockdown is imposed, it would reduce travel and therefore lower demand for oil. However, JP Morgan believes that there will be no reduction in travels. "We believe the market may overestimate the impacts of the recent emergence of the Omicron variant of COVID-19 on oil prices during the US holiday period," it said.
On Friday, stock markets and oil prices hit a new low over fears of a new coronavirus variant. "It's Black Friday today for the retailers, but it's 'Red Friday' right now for the stock market," said Patrick O'Hare at Briefing.com.
Justin Tang at United First Partners said that, "The world has gone through this before" with the Delta variant. "Mutations are expected and not something unknown," he said.
(With inputs from agencies)