SUMMARY
- The second half of the year is expected to see rising oil prices due to struggling supply chains failing to meet the post-pandemic bounce-back in demand.
- As the world's largest importers of crude oil, China and India's increased demand is forecast to surge by 2 million barrels a day by the end of the year.
- Despite fear of a significant supply-demand imbalance, confidence is placed in OPEC+ to increase supply and maintain market equilibrium.
The winds of change in the oil market are set to gain momentum, with prices projected to rise in the latter half of the year. The scales tip in favor of demand, which has outpaced the sluggish supply since the world began recovering from the pandemic, warns the International Energy Forum's Secretary General.
The economic pulse restored by diminishing Covid impacts has failed to invigorate oil supply to the same degree, creating a market imbalance. It appears the shadow of a potential recession is the sole dam holding back the flood of rising prices, according to Joseph McMonigle, the man at the helm of the International Energy Forum.
As the calendar moves toward the year's end, this imbalance threatens to deepen, causing prices to dance to the supply-demand tune, McMonigle explains. His insights were shared during a gathering of energy ministers from the G20 economies held in Goa, India.
China and India, two global giants known for their unquenchable thirst for crude oil, are adding fuel to the fire. The combined consumption from these nations is projected to surge by 2 million barrels a day by the year's end. McMonigle adds that the $80 per barrel price tag could see a further hike, given the dwindling inventory, another testament to the growing demand.
Nonetheless, McMonigle maintains his confidence in OPEC+ stepping in to maintain balance in case of severe supply-demand incongruity. While they tread carefully, ensuring robust demand evidence, they are ready to respond to market fluctuations.
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