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The price of oil could reach $ 100 in 2022

Pump prices could rise further in 2022 and penalize drivers. Fuel cost has reached new full-time highs, according to the latest data released by the Ministry of Ecological Transfer on Friday. Unleaded 95, the most popular gasoline, took just over 2 cents to rise to 1.68 euros per liter, when the average diesel price exceeded 1.62 euros per liter for the first time.

Not surprisingly given the evolution of the price of oil. Brent Barrel rose to $ 88.13 on Tuesday, having already caught its peak in October 2018 the day before. with taxes.

In addition, “pump prices are transmitted faster than before because many fuel sales are now made through supermarkets, which have less storage capacity than tanker stations”, explains Benjamin Louvet, commodity specialist with OFI AM fund manager.

Higher oil demand due to lower pandemic impact

There is no indication that the price of oil should fall again this year. “Tensions are mounting on producers even as demand increases,” the analyst said. Concerns about Omicron’s alternative are easing and its spread should penalize the global economy, and therefore demand for oil, less than expected.

In addition, even if OPEC + member states decided in early January to maintain their program to gradually increase oil exports, they are still struggling to increase their production. “This is the case, for example, in Russia, Nigeria and Libya,” says Alain Corbani, head of the commodities division at management company Finance SA. “It seems that only Saudi Arabia can do this, but the country is not going to increase its production within the cartel alone”, beyond what has been described.

The United States, by itself, is far from returning to its pre-crisis production level. This will be compounded by this, warns Benjamin Louvet, who cites the “biggest difficulty” for oil companies in securing funds to exploit shale oil in the country’s subsoil. The reasons? Rising environmental requirements and shareholder demand for lucrative deposits, while shale oil extraction is particularly polluting and costly.

Lack of investment in the sector

It seems, therefore, that the conditions in place are in favor of raising the price of a barrel, and so on, the price of fuels. “The price of a barrel should continue to rise and may even reach $ 100 in 2022,” estimates Benjamin Louvet.

And maybe that’s just the beginning. In the years to come, black gold could still climb. In any case, its price risks becoming more volatile, especially as investments in the sector do not appear to be sufficient. Full CEO Patrick Pouyanné expects a deficit of 10 million barrels per day in 2025, about 10% of pre-pandemic consumption.

In 2015, the International Energy Agency estimated the level of investment required to keep oil production at $ 630 billion per year, with smaller areas being filled making extraction more difficult. However, “only about 450 billion dollars have been invested every year since then”, notes Benjamin Louvet.

So supply is likely to have more difficulty keeping up with demand. “We did not use the health crisis to question our energy consumption,” said the analyst. Our society’s dependence on fossil fuels like oil will remain very strong, for at least five years.

However, Iran and the central banks could be the changes

However, two factors could contribute to the fall in the price of a barrel in the short term. Ongoing negotiations with Iran indicate that US trade sanctions could be lifted. The country, whose oil exports are estimated at around 2.8 million barrels per day in 2018, could then sell its oil again without restriction abroad, leading to an increase in supply on the world market. .

In addition, “equity and commodity markets have already benefited immensely from the central banks’ extremely convenient monetary policy and low rates,” noted Alain Corbani. However, the latter, and in particular the Federal Reserve (Fed) in the United States, intends to phase out this policy, in order to curb inflation. It remains to be seen whether their decisions will limit the rise in consumer prices, even fuel prices.