OPEC+ production shortfalls and spare capacity concerns are likely to keep
oil markets tight, and prices could hit $125 per barrel as early as the
second quarter of this year, according to JPMorgan Global Equity Research.
"Supply cuts will intensify through 2022 as OPEC+ is unlikely to deviate
from the targeted quota increase, pushing the risk premium higher than $30
per barrel to oil prices," JPMorgan said in a Feb. 11 note.
The price of Brent oil on Tuesday (15/2) at 15:25 WIB was US$ 95.10 per
barrel, while West Texas Intermediate (WTI) oil was perched at US$ 93.99 per
barrel, amid rising tensions between Ukraine and Russia.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies,
a group known as OPEC+, have recently raised their monthly output target by
400,000 bpd, but have repeatedly failed to achieve that increase.
Several OPEC+ countries are struggling to increase output after years of
underinvestment.
The International Energy Agency (IEA) in its monthly report last January
said the gap between the OPEC+ target and actual production last month had
widened to 900,000 barrels per day.
"This underperformance comes at a critical time, and in our view, as other
global producers falter, the combination of underinvestment in OPEC+
countries and post-pandemic rising oil demand would match the point of a
potential energy crisis," said JPMorgan.
"Additionally, we note a muted supply response by non-OPEC producers to
higher prices (led by a greater focus on transition/refunds) could add to
the $10 per barrel premium further," JPMorgan added.