The oil market has been sending signals for months., It’s contradicted many times. Between energy transition announcements, tensions in the Middle East, and a roller coaster of up and down demand forecasts; barrel try to find New equilibrium level confounds analysts.
Oil no longer splatters over $100 during geopolitical shocks. It won’t sink to the brink of collapse like it did in 2020. It has taken root in a strip that seemed impossible just a few years ago.. It’s a kind of silent plateau that hovers around $60 to $70, and it threatens to last much longer than anyone imagined.
meanwhile, Iinternational energy agency (IEA) I reviewed his scenario, And that reading brings relevant nuances. In the current policy, There will be no peak in demand. Projections predict that consumption will continue to increase until mid-century; may exceed 110 1 million barrels per day in 2050. Still, prices remain within a narrow range., And demand does not exert the pressure it would exert in other cycles. This rigidity is beginning to be reflected in the reports of global banks and energy consultancies.
Not OPEC or geopolitics.
Supply is progressing at a speed that surprises even the most optimistic analysts.. The United States maintains historically high production levels and operational efficiencies that sustainably reduce costs. Brazil continues to strengthen hydropower generation offshore The accelerating growth of production in the South Atlantic and Guyana has made it one of the most analyzed cases by large corporations. This joint movement of new and old players will introduce more crude oil than the market expected just a few years ago.
Investment bank reports also echo this trend. goldman sachs point out in several analyzes that supply elasticities outside OPEC limit Brent’s ability to outperform and stabilize the price. 70 dollar. JP Morgan I agree with the idea that rebounds are becoming more and more common. However, the margin is slightly higher in the tension scenario. city suggests a more conservative reading, although the final range converges to the competitor’s estimate. The common denominator is that price ceilings are maintained regardless of methodological differences.
Latest research published by Julius Baer Strengthen that approach. The Swiss bank estimates that the addition of new production capacity will maintain a moderate surplus for several years. Ongoing projects cover a significant portion of expected demand, And that coverage reduces the likelihood that oil will sustainably exceed its current range. over $60. The report also highlights that many producing countries outside the cartel are increasing their presence in the market. No need to set high prices to remain profitable.
In oil dependent countries, This situation raises concerns. Many people budgeted with the idea that they would exceed their budget by a barrel or more. $80. However, cWhen prices fall, public accounts adjust and financial decisions become more prudent. OPEC has sought to exert influence through production cuts and a moratorium on pumping increases. but, Each adjustment provides an almost instantaneous response In the United States, Brazil, Canada, or some African producers.
Technology further magnifies this dynamic. Automation, precision drilling, and improved seismic analysis have reduced costs at nearly every stage of drilling. Many areas that were once considered marginal are now producing at competitive levels. The sector is changing to add barrels with fewer resources and lower operational risk, preserving supply even as prices remain subdued.
lastly, The energy transition further complicates the scenario. Global consumption is growing at a slower pace, and advances in electrification are making transportation slightly less energy-intensive. Growth is present, although not as strong as it has been in previous decades. This evolution is consistent with a market that incorporates more supply than expected and maintains sufficient inventories to absorb temporary shocks. In this context We have summarized the range of 60 to 70 dollars for reference. The market continues to adjust toward a more stable equilibrium than anyone expected.
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