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The world’s top commodity traders predict that oil prices will rebound to US$100 per barrel because investment in new supplies slows before demand peaks and green alternatives fill the gap.
Executives from Victor, Glencore, Trafigura and Goldman Sachs said on Tuesday that the possibility of oil prices reaching $100 does exist. With the price of Brent crude oil rising, prices have reached their highest level in two years this week. More than $73 per barrel.
The prediction came when people were worried Inflation is rising As the pace of economic recovery accelerates and driven by supply shortages, many commodities such as copper have reached record highs.
Due to the slowdown in demand during the coronavirus pandemic and concerns that demand may peak in the next decade, oil has fallen behind. But in recent weeks, there has been an increase in forecasts of substantial price increases in the coming years.
Jeremy Weir, executive chairman of Trafigura, one of the world’s largest independent oil traders, said at the Financial Times Commodity Global Summit on Tuesday that he was “concerned” about the lack of new supply spending. , Because the world is not ready to make the leap to clean energy and fully electrified.
“I actually think oil has a chance to reach these numbers,” he said at the summit. “The oil problem is not demand… The supply situation is quite worrying. We have gone from 15 years of reserves to 10 years. We have seen capital expenditures rise from US$400 billion a year five years ago to only US$100 billion a year. U.S. dollar. So there are concerns on the supply side… I think this may push up prices.”
Glencore’s top oil trader, Alex Sanna (Alex Sanna) also said that the oil price is more likely to be $100.
“If you are not meeting your needs while cutting supply, then you will have a price misalignment,” Sanna said. “There are actually only one or two events before the oil price surge.”
Since 2014, the oil transaction price has not exceeded US$100 per barrel. At that time, the supply surge in the U.S. shale industry led to The last so-called super cycle To the end. At the beginning of this century, driven by the growth of Chinese demand, oil prices rose from nearly US$10 per barrel to more than US$100 in 2008. Although the price fluctuates, it averages about US$100 per barrel for the next six years.
Russell Hardy, CEO of Vitol, the world’s largest independent oil trader, said that it is “possible” for oil prices to reach $100, but he believes that there should be enough spare capacity because OPEC Allies such as Russia and Russia are still restricting supplies due to the pandemic.
“There are 5 million barrels of spare production blocked on the market today,” Hardy said.
But Jeff Currie of Goldman Sachs has been one of the main proponents of rising oil in the past decade. He believes that as government stimulus measures boost demand, commodities are looking for a new super cycle.
He believes that oil demand will rise because policy makers will spend on large-scale green infrastructure projects as stimulus measures aimed at addressing inequality.
“We believe that every US$2 trillion in green capital expenditure is equivalent to about 200,000 barrels of oil per day,” he said.
Widow’s Hardy said that the trading company believes that oil demand will peak around 2030, but the initial demand will not fall sharply, but will stabilize at a level much higher than the 100 million barrels per day reached for the first time in 2019.
He said that the critical period for the risk of the oil supply gap is from 2025 to 2030, and due to the growth of developing countries, global oil demand will not begin to decline rapidly until 2040.
“Oil demand may continue to grow until 2030, clearly dominated by non-OECD and developing markets,” he said.
Some of the largest oil producers, such as BP and Royal Dutch Shell, have stated that their oil production will begin to decrease in the next few years because they are under pressure from investors to shift their investments to greener forms of energy.
Equinor, the Norwegian state-backed oil company, said on Tuesday that by 2030, it will spend 50% of its capital expenditures on renewable energy and low-carbon investments, but its oil production is not expected to decline after that.
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