Fitch Solutions Country Risk & Industry Research says that Brent price forecast for 2022 would steadily at US$72/bbl with its narrative for oversupply to build throughout the year remaining intact.
However, it said that the outlook remains subject to multiple risks on both the supply and demand-side fronts. “While the Omicron variant is fuelling new all-time high infection rates across the globe, so far hospitalisation rates remain manageable and severe illness is appearing less likely than with earlier variants,” Fitch said.
Fitch said that the national responses to the new outbreaks have been mixed, with many implementing soft lockdowns and travel restrictions, largely impacting aviation demand. “Supply remains also uncertain, with a potential shift in OPEC+ tapering policy a risk, given the uncertainty in demand,” Fitch said.
It said that the unplanned supply outages remain a possibility, with production in Libya severely impacted by political infighting and emergency repairs to a key export pipeline.
It said that it expects OPEC+ to stick to their previously announced strategy of increasing production by 400,000b/d in February at their next meeting in the early days of January.
“Should OPEC+ agree to increase output as agreed, by our estimates this would leave about 3mnb/d of production cuts remaining. If OPEC+ pause or alter their production increases, we could see support for higher prices in the form of improved fundamentals, which we currently see weakening through 2022.
