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Brent crude oil prices are currently close to $56/bbl, having started the year at$52/bbl. Suvro Sarkar, Industry Analyst at DBS Bank, revises up the average Brent Crude Oil price forecast for 2021 to $55-60/bbl and introduces the 2022 average Brent Crude Oil price forecast of $60-65/bbl. 

Key quotes

“Brent averaged around $43/bbl in 2020. We are likely to see a much better year for oil in 2021, as demand recovers (by around 6mmbbpd by our projections), while supply remains curtailed by OPEC+ production cut agreements (increasing by around 3.0mmbpd by our projections, less than the demand increase). While oil demand is still not expected to recover close to pre-covid levels in 2021; the pace of demand growth is nevertheless expected to outstrip the pace of supply growth in 2021, leading to inventory drawdowns and stronger oil prices overall.”

“With a stronger start to the year in our forecasts now, we thus raise our average 2021 Brent crude oil price forecast to$55-60/bbl. We also introduce 2022 average Brent crude oil forecast of$60-65/bbl on the assumption that air travel recovers closer to normal levels in 2022, OPEC+ discipline stays and US shale growth is contained under the new Biden administration.”

“There remain a few key risks to our projections: increasing production from Libya, which is exempt from the OPEC+ agreement, possibility of less hawkish stance on Iran from the Biden administration, which could bring some Iranian barrels back to the market over time, chances of dissent among OPEC+ members recurring at some point, leading to a breakdown of the OPEC+ supply cuts agreement, faster-than-expected comeback from US shale over the course of the year, and of course, hiccups in economic growth revival depending on the speed of vaccine rollouts and efficacy levels.”