The future trend of international oil prices remains unclear

Last week, international oil prices were boosted by news of OPEC+production cuts. Under this influence, major analytical institutions have differentiated their predictions for this year’s international oil prices. Optimists represented by Resta believe that for the rest of this year, international oil prices will exceed $100 per barrel for most of the time. Pessimists, represented by Morgan Stanley, stated that due to weak demand, international oil prices will not remain above $100 per barrel for a long time this year. At present, the agency has instead lowered its oil price forecast, such as the second quarter oil price forecast dropping from $90/barrel to $85/barrel, and the fourth quarter oil price forecast dropping from $95/barrel to $87.5/barrel. The author certainly respects the analysis and judgment provided by major analysis institutions based on massive data, but overall, the differentiation predicted by analysis institutions reflects the current bullish control of international oil prices. The focus of each major institution is different, and there are huge differences in natural predictions. It is precisely due to the bullish control characteristics of international oil prices that the trend of international oil prices is not clear.

Generally speaking, there is not much differentiation in the analysis of international oil prices among major analytical institutions. However, since the outbreak of the Russia-Ukraine conflict last year, the analysis of international oil prices by analysis institutions began to show differences. When the Russia-Ukraine conflict just broke out last year, many analysts believed that the international oil price would quickly exceed 160 dollars/barrel. But the reality is that international oil prices have indeed experienced two surges, but they have not reached such a high level. Last year, factors such as economic impact, strengthening non fossil fuels in Europe and America, and the Asian pandemic all dragged down the rise in international oil prices.

I believe that OPEC+is currently undergoing large-scale production reductions due to competition for international oil pricing power. However, the situation in 2022 has already shown that the current international oil price is controlled by multiple sources, and OPEC+’s desire to rely on production control to boost international oil prices may not be easily realized. At present, the construction of renewable energy facilities is in full swing, and many OPEC member countries are also actively exporting renewable energy such as hydrogen and ammonia; The global economic situation is still uncertain, with a high possibility of weak economic growth in developed countries, which are still releasing oil reserves; OPEC+is not a monolithic entity internally, and many countries’ production cannot reach the production reduction level of OPEC+, and there is no room for further production reduction. These are all reverse control factors of international oil prices. It is currently difficult to predict which factors will have a more significant impact on international oil prices.

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