Wednesday, February 8, 2023
spot_img
HomeHeadlinesVitol CEO Sees Oil Above $100 for a ‘Prolonged Period’

Subscribe

To our FREE newsletter
Get all the latest maritime news delivered straight to your inbox.

Vitol CEO Sees Oil Above $100 for a ‘Prolonged Period’

Oil prices could be set for a “prolonged period” above $100 a barrel over the next six to nine months, with the world setting fresh demand records this year, said Vitol Group Chief Executive Officer Russell Hardy.

Crude already surged to within a few dollars of that level earlier this month, as the recovery in fuel use from the pandemic started to run into supply constraints. In an interview in London with Bloomberg television, the boss of the world’s largest independent oil trader said the market will get tighter, with daily consumption set to rise well above pre-Covid levels by the end of 2022.

“The 100 million-barrel number is probably going to be exceeded this year,” Hardy said. “Demand is going to surge in the second half” if travel continues to return to normal.

As some of the biggest players in oil market gather in London for International Energy Week — the first time the event has happened in-person for two years — their industry is still grappling with the consequences of the initial pandemic price slump.

Energy supplies are struggling to keep up with a robust economic recovery. Several OPEC+ members, plagued by under-investment and disruptions, aren’t able to revive all of the output they shut down in 2020. Many companies, from U.S. shale drillers to global supermajors, are focused on giving cash to shareholders instead of growing production.

The result is a surge in oil prices that’s feeding an inflationary spike. The situation threatens to derail the global economic recovery and inflict a cost-of-living crisis on millions. Brent crude oil for April opened at $96.55 on Tuesday and briefly hit a high of $99.50 before retreating.

“More crude is required,” Hardy said. With daily demand rising by the end of this year to 1 million or 2 million barrels a day above end-2019 levels, “the whole system is going to be fairly tight.”

The tightness of the market is demonstrated by a price structure in oil futures called backwardation — where prices for near-term delivery rise above contracts for later months. This pattern is currently prevalent in crude, diesel, natural gas and coal.

“The situation we have today, where all markets are very backward, tells you there’s not much give in the system,” Hardy said. Energy supplies are only arriving “just in time at the moment, which is not a great place to be.”

Patchy Recovery

The recovery in fuel demand is still uneven. In oil products, Vitol sees gasoline consumption in the U.S. down by around 400,000 barrels a day currently, compared with February 2019.

“We still think it’s being affected by work from home,” Hardy said. “People are not driving to the station, they’re not driving to work.” High prices may also be encouraging drivers to use their cars less, he said.

Instead, diesel-powered industrial transportation is fueling demand growth, but jet fuel consumption remains capped by a lack of long-haul flights.

Oil supply is growing, just not as fast as consumers need, Hardy said.

U.S. shale is increasing, but not at the same level it did during the boom years. Capital constraints from drillers and a lack of crew are also holding back production, Hardy said.

OPEC+ is gradually boosting output, and a nuclear deal with the U.S. could allow Iran to pump an extra 1 million barrels a day, but that supply is already factored in for the second half of the year, Hardy said.

“Eventually we’re going to run out of spare capacity,” he said. “That’s what the market is trying to work out — how worried to be about that scenario.”

Source: Bloomberg

Related Posts

Video

Finance & Economy
Shipping News
Ports

Royal Caribbean set for record bookings after smaller loss

Royal Caribbean Group reported fourth quarter 2022 Loss per Share of $(1.96) and Adjusted Loss per Share of $(1.12). These results exceeded the company's...

Frontline: Emergency Arbitration claims initiated by Euronav fully dismissed

Frontline plc, formerly Frontline Ltd., announces that the Emergency Arbitration claims filed by Euronav have been fully dismissed by the Emergency Arbitrator. The decision was...

DP World reports solid volume performance in 2022

DP World Limited handled 79.0 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals in full year 2022, with gross container...

LNG boosts CPLP 2022 results

Capital Product Partners L.P. released its financial results for the fourth quarter ended December 31, 2022. Highlights  Three-month periods ended December 31, 20222021Increase/(Decrease)Revenues$79.9 million$63.6 million26%Expenses$42.1 million$35.7...

Keppel Corp posts 9% drop in full-year profit

Singapore’s Keppel Corp said on Thursday its net profit for the year fell 9%, partly hurt by weak performance from its urban development business...

Royal Caribbean set for record bookings after smaller loss

Royal Caribbean Group reported fourth quarter 2022 Loss per Share of $(1.96) and Adjusted...

Baltic Index Extends Fall On Lower Rates For Panamax, Supramax

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index hits nearly three-year low on weaker vessel demand

The Baltic Exchange’s main sea freight index, tracking rates for ships carrying dry bulk...

Baltic index hits over 2-year trough on waning demand for larger vessels

The Baltic Exchange’s dry bulk sea freight index dropped to its lowest level in...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury...

Clarkson Port Services acquires offshore renewable energy service provider, DHSS

Clarkson announced that its wholly owned subsidiary, Clarkson Port Services, has completed the acquisition of DHSS, a leading provider of integrated logistics services to...

DP World reports solid volume performance in 2022

DP World Limited handled 79.0 million TEU (twenty-foot equivalent units) across its global portfolio of container terminals in full year 2022, with gross container...

DP World wins bid for development of a mega-container terminal at India’s Deendayal Port

DP World has won a major concession to develop, operate and maintain the mega-container terminal at Deendayal port in Gujarat, on the western coast...

Luxury Cruise Market Holds Much Promise For Greek & East Med Hidden Gem Destinations

The appeal of Greece and the East Mediterranean as an ideal region for luxury cruising will be one of the main highlights of the...

Port of Los Angeles proposes cruise terminal project

The Port of Los Angeles is inviting comments on a draft Request for Proposals (RFP) for the future development of a new Outer Harbor...