Xinhua News Agency, Beijing, January 20 (International observation) Is the rise in oil prices a temporary phenomenon or a long-term trend
Xinhua News Agency reporter
Recently, the international crude oil price has continued to rise, among which the crude oil futures price in the New York market hit the highest level since October 2014 on the 18th, which has aroused great concern in the market.
Many analysts believe that the tightening of crude oil supply and demand may continue in 2022, which will support oil prices, but there are differences of opinion on whether oil prices will continue to rise for a long time.
Three main reasons to push up oil prices
Experts generally believe that the recent rise in oil prices is mainly due to the intensification of geopolitical risks, the easing of new crown epidemic measures and the lack of production in oil-producing countries.
A fuel tanker explosion and a fire at an airport construction site occurred in Abu Dhabi, the capital of the United Arab Emirates, on the 17th.
The UAE, the third-largest producer of the Organization of the Petroleum Exporting Countries (OPEC), is seen as facing a real risk of disruption to crude supplies.
In addition, an oil pipeline connecting Iraq and Turkey was interrupted for a short time due to an explosion on the 19th, and tensions between Russia and Ukraine have not yet eased, which also intensified market concerns about oil supply interruptions.
Fu Qiang, academic director of Chinese EMBA at the National University of Singapore Business School, said that the market is extremely anxious about the escalation of geopolitical conflicts, which strengthens the expectation of tighter crude oil supply in the future.
Singapore's DBS Group said in a report that a series of supply disruptions and geopolitical instability pushed Brent crude futures in London above the $80 a barrel mark.
In addition, the impact of the mutated new coronavirus Omicron strain on crude oil demand was not as severe as expected, and the relaxation of epidemic control measures in some countries led to an increase in crude oil demand, which pushed up oil prices.
Lower-than-expected output from some major producers is another factor behind the recent rise in oil prices.
OPEC and non-OPEC producers reached an agreement to cut production in April 2020.
The parties agreed last year to gradually increase production and to increase total output by 400,000 barrels per day (bpd) per month from August last year.
However, some oil-producing countries have been unable to meet production targets due to insufficient investment and other reasons.
Temporary phenomenon or long-term trend?
How long will high oil prices last?
Will oil break $100 a barrel?
At present, analysts and experts have different opinions.
The International Energy Agency recently released a report that as major oil-producing countries expand production, crude oil production will gradually catch up with demand, supply tensions are expected to ease, and the rising trend of oil prices will also slow down.
The report believes that if OPEC and non-OPEC oil producers continue to gradually withdraw from the production reduction plan, the average daily increase in global crude oil production in 2022 is expected to reach 6.2 million barrels.
UAE Energy Minister Mazroui told the media on the 19th that he will strive to complete the production increase target set by OPEC and non-OPEC oil-producing countries last year, and is not worried about "short-term" crude oil price increases.
Li Junhao, an economist at OCBC Bank in Singapore, believes that the possibility of Brent crude oil futures rising to $100 a barrel by the end of this year is increasing. "Supply continues to fail to keep up with demand, making the situation particularly tight."
Energy columnist Tsvetana Paraskova wrote in an article that the growing geopolitical risks, coupled with the significantly limited ability of OPEC and non-OPEC oil-producing countries to increase production, means that the market remains bullish on international oil prices.
Wu Bingbing, director of the Institute of Arab and Islamic Culture of Peking University, pointed out that in the medium and long term, the world is promoting the "dual carbon" action, and the investment in the upstream development of traditional fossil energy is showing a trend of decreasing, resulting in restricted production capacity, which in turn brings about a decline in market supply. Relatively shrinking state, superimposed oil consumption growth is expected to continue to heat up, or will bring a window period of international energy prices.
At present, the world economy is still struggling to recover from the impact of the epidemic and faces many challenges such as inflation.
As an important industrial raw material, the impact of higher oil prices on the economy cannot be ignored.
Zhang Longxing, director of the Oil Products Division of the Shanghai Petroleum and Natural Gas Exchange, believes that for China, rising international energy prices will increase imported inflationary pressures, increase production costs in manufacturing and other fields, and then weaken the competitiveness of these industries.
Fu Qiang said that China is one of the largest crude oil consumers in the world, and rising crude oil prices will increase the cost of economic operation.
(Participating reporters: Cai Shuya, Yan Jing)