Following the weakening of global demand for energy due to the widespread outbreak of the Corona virus, the global industrial sector has entered a severe and historic recession, and this issue has sounded the alarm for the oil industry of Iran and the world. In this analysis, we will examine the future outlook for world and Iranian oil prices. Please be with Artan Press
According to experts, the Asian oil market is controlled by OPEC, and if OPEC Plus does not control supply management, we will see more and more falling prices. In recent days, the Organization of the Petroleum Exporting Countries (OPEC), the British company BPP and the world oil trading giant have forecast unfavorable demand for this year.
*** Global oil demand this year
With the widespread outbreak of the Corona virus, OPEC hopes for a speedy recovery are out of reach in its latest monthly report. Global oil demand is also projected to decline 9.4 million barrels per day this year, up from 9.60 million barrels per day last month, a threat to all oil and energy nations.
British Petroleum estimates in its main annual scenario, which estimates global oil prices every year, that the Corona virus will reduce its consumption by about 3 million barrels per day by 2025 and by about 2 million barrels per day by 2050. This shows that the consequences of the Corona virus will remain on the tired body of oil for many years to come, and that Iranian oil policymakers must look for alternative solutions.
The International Energy Agency (IAEA) acknowledged in a monthly report on the latest state of the world oil market that “we expect oil demand improvements to slow significantly in the second half of 2020, as most of the improvements that could have accelerated The uptrend has been activated and the basis of technical analysis indicates a gradual decline in oil prices.
*** Iranian oil price formula
In the current situation, it is not possible to speak with confidence about the market situation. A new wave of coronary heart disease in the late fall will again impose restrictions that will once again affect global oil sales. Iran is likely to suffer from this scenario because in the fall of this year, in addition to the health risks posed by the corona, the US election will also enter into the Iranian oil price formula, and if the scenarios materialize in a way that increases Iran’s political risks, Iran It must keep its oil prices below the world average so that the risk of trading in Iranian oil is acceptable to the outside world.
International oil analysts predict that demand is likely to fall again and the situation will be the same as in the past nine months. Therefore, decisions have been made in this regard at the macro level. For example, in the last meeting of OPEC Plus, a reduction of two million barrels was approved, ie a reduction from 9 million and 700 thousand to seven million and 700 thousand barrels. This in turn could slow down OPEC oil prices and stabilize prices at their base.
In the current market situation, there is a need to reduce production because the new wave of coronavirus epidemic in the world has caused countries to return to previous restrictions, which means reduced demand, and with this reduction in demand, we will have lower prices.
*** Goldman Magazine Forecast
Goldman Sachs predicts that despite declining crude oil production in 2021, prices will fall due to declining cross-cutting demand. The publication also examines the US election scenario and its impact on oil prices.
If Biden is elected President of the United States, with the increase in oversight and spending in the oil sector, especially shale oil, we will see an increase in Brent oil prices, which will directly affect the price of OPEC oil and it is predicted that In this scenario, the price of Iranian oil will increase to $ 10 per barrel by May 1400.
If the Biden government reverts to a nuclear deal with Iran and completely lifts oil sanctions on OPEC, the second-largest oil producer, the “reduction in shale supply” will be offset by increased Iranian exports. This is exactly the opening that will happen in the Iranian oil industry over a period of one year.
The agreement with Iran, in addition to increasing the costs of formulating a new formula and producing shale oil, will challenge the US compared to the current situation. As a result, any possible price reductions will be offset by the sale of Iranian oil.
*** Growth of Iranian oil prices in world markets
The US Energy Information Administration predicts that US crude oil production will decline by the end of 2020. However, there are many obstacles to a return to a nuclear deal with Iran, including mutual consent and a common dialogue, so this may not be an immediate priority for the US government. So, in the most optimistic case, we will see the growth rate of Iranian oil prices in world markets, and in more probable scenarios, this issue will be probable with a delay of several months.
Demand for oil next year will be lower in almost all countries except China than in 2019, and as a result, oil prices will not increase significantly from the current level of about $ 40.
*** Average oil prices in 2021
The World Bank predicts that the average price of a barrel of oil will reach $ 44 per barrel in 2021, which is slightly higher than the average price of $ 41 this year. The average oil price in 2021 will be significantly lower than the average oil price of $ 61 in 2019. High levels of oil reserves will keep prices below $ 50 by 2022. The price reduction is due to Saudi Arabia’s unprofessional bid to auction off Gulf oil It is certain that the main damage in the long run will be to this country and Aramco facilities.
OPEC Plus countries, on the other hand, have a significant level of surplus production capacity, which reduces the likelihood of significant oil price growth in the short term.
Despite the global decline in world oil prices, the price of natural gas in 2021 due to improved consumption and growth of technologies for the use of natural gas along with the improvement of the global economy will grow dramatically. Look for strong revenue channels. If the oil market is left out in the short term, but the Europeans’ heavy dependence on gas can provide the country with more revenue, which we will address in more detail in future analyzes.
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