"This Year’s International Oil Prices Expected to Continue Rising Due to Delayed Demand Recovery"

[Asia Economy Reporter Oh Hyung-gil] This year, international oil prices are expected to continue rising due to delays in oil demand recovery caused by the spread of COVID-19 variants worldwide.

According to the World Energy Market Insight report by the Korea Energy Economics Institute on the 1st, international oil prices rose about 50% last year, reaching a peak since 2014 by climbing from $50 per barrel at the beginning of the year to $86 in October, before turning downward.

Summarizing this year’s oil price forecasts from major international oil price outlook institutions, Brent and WTI prices are expected to start the first quarter at $79.1 and $75.8 per barrel respectively, maintain a steady or rising trend in the second quarter, and then shift to a downward stabilization in the third and fourth quarters.

However, the report pointed out that there are significant differences in the projected price increase ranges among these forecasts.

Factors influencing international oil price fluctuations include the spread of COVID-19, OPEC+ (the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC oil-producing countries including Russia) production cut activities, the US-Iran nuclear negotiations, and international political changes such as the Ukraine situation.

The report explained, "Most experts expect the impact of viruses like Omicron to be temporary, and rapid lockdown measures will not significantly affect this increase in oil demand," adding, "OPEC’s technical report assessed that as global COVID-19 response capabilities improve, the impact of the Omicron variant is less than expected and will not last long."

There are also doubts about OPEC+’s ability to increase oil supply.

The report stated, "Experts pointed out that it will be difficult to continue increasing production by 400,000 b/d amid declining spare production capacity, and OPEC+ remains cautious about encouraging new investments due to uncertainties surrounding COVID-19."

OPEC+ plans to hold the 25th ONOMM on February 2 to discuss market conditions and finalize the production cut quota for March.

Additionally, indirect talks between the US and Iran and the possibility of Russia’s invasion of Ukraine are also cited as short-term factors affecting oil prices.

The report forecasted, "If an agreement is reached between the US and Iran, Iran’s oil production is expected to increase by 700,000 b/d (barrels per day)," and added, "Due to the Ukraine situation, Russia may limit natural gas supply to Europe and could terminate oil and gas contracts with all countries sanctioning it, potentially halting oil and gas supplies entirely."

This content was produced with the assistance of AI translation services.