Oil: Four cumulative causes of a possible further sharp rise – Natixis

According to strategists at natixis, we can begin to worry about the risk of a sharp rise in oil prices in the second half of 2021, in 2022 and even beyond for four reasons. A sharp rise in oil prices would obviously have significant negative effects on growth in many countries.

What accounts for the risk of a very high oil price?

“The strong recovery in global activity, which will lead to a marked upswing in global oil consumption.”

“The inertia of global oil demand due to the long lifespan of cars, aircraft, industrial equipment, power plants, etc.”

“Weak investment in exploration-production for several years. Investment in exploration-production has decreased in the recent period, which will reduce oil supply for several years.”

“Pressure on private oil and gas companies is strong for them to reduce their investments in fossil fuels (latest report from the International Energy Agency, investor pressure, etc.), which will weaken the supply of oil from these companies, and which will not be easily offset by the production of national oil and gas companies in producer countries.”