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Global Crude Oil Market Trends From Jim Burkhard, IHS Markit

Can the oil industry survive in North America?

Crude oil prices can be influenced by any number of economic and geopolitical factors ranging from production or demand changes, unplanned interruptions in supply, economic growth and inventory surplus.

Crude oil prices can be influenced by any number of economic and geopolitical factors ranging from production or demand changes, unplanned interruptions in supply, economic growth and inventory surplus.

The coronavirus transformed global oil markets in the first half of 2020, spurring historic changes to energy supply chains and products used to invest in crude.

A healthy oil market is crucial for the world economic growth. Fortunately, positive news about a vaccine, Joe Biden winning the US presidential election, and the return of Libyan production will impact the oil market in 2021. These events point to higher oil demand in 2021 and more oil supply, including from Iran.

The vaccine news potentially points to higher world oil demand and prices in 2021, but the demand outlook is bleaker over the next two to three months. The emergence of new cases of COVID-19 in Europe and North America mean the risk to our global demand outlook remains to the downside, even though mainland China continues to record year-on-year growth.

Oil output in Libya continues to increase and OPEC+ will accommodate the return of Libyan output. OPEC+ will not increase production 2 MMb/d in January as the Libyan crude oil production is back up to 1.0‒1.2 MMb/d and a COVID-19 winter surge creating near-term risks to demand.

With the recent burst of activity in North America, the M&A aim to strengthen financial positions as the energy transition moves beyond slow motion. Consolidation is a way to meet investors demand-more financially disciplined upstream companies that have the scale and high-quality assets to generate better returns at lower oil prices.

Effective vaccines and more supply from Iran were factored in our previous outlook. In our base case, Dated Brent averages $47/bbl in 2021 and $56/bbl in 2022. The 2020 price is on track to average $41/bbl.

What’s ahead for the global LNG market? today!

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