Oil prices will hit $80 a barrel this year as demand comes roaring back and producers won’t be able to immediately respond with sufficient supply, Socar Trading SA said, joining a chorus of bullish calls on the market, APA-Economics reports citing Financial Post.
Hayal Ahmadzada, Socar’s chief trading officer, said the glut of excess oil stocks that built up in 2020 in response to the pandemic will be fully drawn down by the summer. At the same time, soaring prices for steel used in pipes, wells and fittings as well as the high cost of capital for producers will crimp a meaningful supply response by an already hobbled industry even as demand returns.
“I will not be surprised if we see $80 a barrel in summer or before year-end and above $100 a barrel in the next 18 to 24 months,” Ahmadzada said in an interview from Baku, Azerbaijan.
Ahmadzada said Socar had already sold all of the oil it stored during the crisis, as much as 15 million barrels.
Ahmadzada added he expects the Organization of Petroleum Exporting Countries and its allies, which includes Russia, to taper production cuts and return to pumping crude at full tilt soon. Even so, it won’t be enough, he said.
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