OGUK Business Outlook 2021
BUSINESS OUTLOOK 2021
UK Oil and Gas Industry – Performance and Outlook (continued) Supply outlook Supply fell at a lower rate than demand last year, with a 6.4 million bpd decline — largely the result of cuts imposed by OPEC+ members and other major producers (including Norway). This led to significant oversupply in the market, especially during spring and early summer. The continued influence of OPEC+ decisions was underlined in early March this year when the bloc agreed to maintain production restrictions, leading to prices spiking above $70/bbl. The US Energy Information Administration (EIA) anticipates that global supply will increase to 97.3 million bpd this year, with a further rise to over 100 million bpd in 2022 — up from 94.2 million bpd in 2020. Yet concerns persist around the fall in investment and the ability of supplies to respond at the same rate as demand. This may lead to a tighter market and result in faster price growth.
Figure 1: Average Brent Price and Global Oil Supply and Demand
Global Oil Demand
Global Oil Supply
105
120
Nominal Brent Price ($/bbl)
100
100
95
80
90
60
85
40
80
Average Nominal Brent Price ($/bbl)
Global Oil Supply and Demand (Million bpd)
20
75
0
70
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E
Source: IEA, EIA
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