JPMorgan Projects Oil Price Can Be US$ 125 per Barrel, This is the Driver

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JPMorgan Projects Oil Price Can Be US$ 125 per Barrel, This is the Driver


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.


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