Demand and supply pressures will balance each other out in the oil market, and it is possible that prices will remain in their current range in a year if countries recover from the coronavirus crisis, said oil expert Dan Yergin.
“If the rest of the world really makes a recovery, I think it’s reasonable to believe that oil would be in that range of $ 60 to $ 75,” said IHS vice chairman Markit.
“That’s what the markets will tell us when the US recovers, and China has already recovered,” he told CNBC’s Street Signs Asia on Tuesday.
Brent crude oil futures rose 1.33% on Tuesday afternoon in Asia to trade at $ 67.94, while US crude oil futures rose 1.28% to $ 64.19.
An offshore drilling platform stands in shallow waters on the Manifa offshore oil field in Manifa, Saudi Arabia, operated by Saudi Aramco.
Simon Dawson | Bloomberg | Getty Images
While a trader sees prices potentially soaring to $ 100, Yergin believes that much of the supply is still offline and can meet growing demand as the global economy recovers.
“There is still a large surplus of oil that needs to be put back into the market,” he said, noting that OPEC and its allies helped raise prices by cutting production by nearly 10 million barrels a day .
“There will be pressure to equalize and there would be more supply and we would see the US go back into production,” he said.
However, Yergin admitted that it is difficult to predict where prices will be and said that Europe’s recovery is in equilibrium.
“The US is currently in a hypereconomic recovery, China has a very strong recovery and that will fuel demand,” he said.
“The greatest uncertainty is actually in Europe now, and when Europe will be able to get out of its lockdown and start growing again,” he said.
The adoption of Covid vaccines in Europe has been slow and many Covid restrictions remain in place. The emergence of a contagious variant has brought the death toll from Covid-19 on the continent to over 1 million.