Quarterly Trends Report

Q2 2021: What's oil's recovery outlook?

  • Multi Asset
  • Energy
  • Global

The oil industry can be viewed as a bellwether for the world’s economy. And to say that this segment has been volatile during the past 18 months would be something of an understatement – but its prospects are starting to look brighter now. “In 2020 demand was down by about 9 million b/d. In 2021 it’s going up by about 5.5 million b/d... It’s been a long haul, but we’re getting there”, a former head of the International Energy Agency (IEA) told Third Bridge Forum.

While myriad risks remain, as discussed later in this article, the global vaccination drive and consequent economic reopening are buoying demand. In another Interview, a senior executive from CMarkits Ltd posited that pre-crisis levels could be reached by mid-2022, but “that assumes that the vaccination rate is much faster than the rate at which the virus changes from one form to another, or, even if it changes, then we don’t have a new variant that is resistant to the available vaccines now.” 

OPEC+ is one force supporting prices. In late July, responding to increased prices in the face of constrained supplies, the group agreed to boost oil supplies by 400,000 b/d from August to December. The IEA executive is “not surprised” by their actions. Indeed, “it is that discipline which has helped bring the market back towards rebalancing”. The CMarkits executive echoed this sentiment, saying that OPEC+ “has been the largest or one of the largest supporters to the current price environment”.

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