Cardinal Energy Ltd (Alberta) T.CJ

Brent crude $140 a barrel? Andurand?

[Kherson]

Mamdouh SalamehonJanuary 07 2023said:

Even if China fully reopens its economy, its crude oil imports could rise to 12 million barrels a day (mbd) compared with an average daily import of 11.76 mbd in 2021. This doesn’t in any shape or form warrant a rise of Brent crude to $140 a barrel as Andurand suggested.

What could, however, cause Brent crude to surge to $140 is a situation in which 8.0 mbd of Russian crude and petroleum products accounting for 13% of global oil exports are prevented from reaching the global oil market. In such circumstances the world could face an oil crisis which could be twice as bad as the 2008 financial crisis or the 2014 collapse of oil prices or the 1973 Arab oil embargo. We could then then see Brent crude surging higher than $140.

OPEC+ which is probably one of the very best forecasters in the world projects that global oil demand would grow by 2.5 mbd in 2023 over 2022 rising from 101.3 mbd in 2022 to 103.8 mbd.

The global oil market will continue to be driven in 2023 by many bullish factors including China’s easing of its lockdown, robust global oil demand, a shrinking global spare production including OPEC’s and a huge underinvestment in oil and gas.

Against such realities, crude prices have no alternative but to resume surging with Brent crude headed towards $100 a barrel or even higher in the first quarter of 2023.

Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert