The Repsol Group, whose parent entity is Repsol, S.A., is made up of more than 300 entities incorporated in 36 countries. This is its view of the energy environment.
On the supply side, throughout this year the involvement of OPEC+ in maintaining the balance between supply and demand has become clear.
The de facto leaders of the group, Saudi Arabia and Russia, have proven to be faithful to their defense of the price, whose objective level seems to be set in the range of 70-80 dollars per barrel, and they have materialized this with high compliance with the agreed production cuts.
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There is also uncertainty about how quickly US shale production will recover.
The pandemic had a significant impact on production in this region and almost completely annulled the drilling dynamics, which even before the pandemic had been suffering from a lack of investment as a result of the financial orthodoxy assumed by companies in the sector.
In principle, this dynamic will depend on the price level and will also be determined by the cost of reducing methane emissions at the head of the well proposed by President Joe Biden.
For now, drilling activity appears to be picking up along with oil prices and is only 30% below late-2019 levels.
The price recovery is not exclusive to oil, but extends to most raw materials, which could be leading to a new cycle of raw materials.
The economic recovery experienced in a context of control of the pandemic through vaccination processes, together with the support of monetary and fiscal policies, has allowed a notable increase in the demand for goods and services in general, which adds to the need to replenish merchandise inventories that were reduced during the year 2020 due to the lack of production during the confinements.
In the same way, the lack of maintenance and the cancellation of projects in a wide spectrum of sectors mean that the response on the supply side is being slower, creating bottlenecks in almost all value chains, thus affecting a general price increase.
Global demand will find it more difficult to grow steadily if only a group of countries have vaccinated their citizens.
In fact, vaccination processes in rich countries are not being a guarantee of immunity either, due to the mass of the anti-vaccine population that prevents reaching the aforementioned threshold.
On the other hand, we must take into account the potential support that can be given to demand by the fact that emerging countries reach similar dynamism to developed countries in their vaccination processes.
According to the company, the benchmark Brent crude has gone from trading at $50 per barrel at the beginning of 2021, to reaching levels not seen since November 2014, above $86 per barrel at the end of October. The annual average in 2021 stood at 70.9 dollars per barrel (70% increase in the year).