The excellent Daniel Yergin has a piece in the Wall Street Journal on the oil market, here..
”What will recovery mean for oil demand? The one case study of a post-Covid country is China, where for the last several months oil consumption has been higher than in 2019. Demand for motor fuel is also currently higher than last year in India and Brazil, though both are still plague-ridden. The new year begins with total global oil demand down about 8% from 2019 levels. At this point, it seems likely that consumption will get back to where it was last year by late 2021 or early 2022.
But risks abound next year even with widespread vaccination. OPEC-plus is still holding back more than seven million barrels a day of production. Agreement was reached in December to bring that production back gingerly, at 500,000 barrels a month. The Saudis and Russians celebrated with a ministerial barbecue in Riyadh that was meant to put their price war of last spring firmly into the past. Still, as the months go on, the focus of countries needing revenues will shift from staving off the disaster of another price plunge to gaining market share. Moreover, another 1.5 million to 2 million barrels a day of Iranian oil production has been excluded from the market by U.S. sanctions imposed by the Trump administration. If the Biden administration re-engages with Tehran on the nuclear deal, those sanctions could be eased in 2021. Or Iran could simply seek to test the new administration by restarting exports on its own.”
Do read the whole thing…
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