The Asian Development Bank (ADB) indicated upside and downside risks in world oil prices for 2022.
For the next year, the ADB expects oil prices to decline from their recent highs as supply outstrips demand with revived oil production in OPEC + and the United States, averaging $ 74 / barrel in all year.
On the one hand, the upside risks to the price forecast stem from geopolitical tensions and the prolonged substitution of crude oil for natural gas, especially for heating buildings and generating electricity.
Rather, the downside risks reflect concerns about the Omicron variant, renewed Covid-19 outbreaks in general, and the persistent disruption of global value chains.
Brent crude oil prices rose in October to a three-year high averaging $ 84 per barrel as rising demand met tight supply.
At the same time, the rebound in global economic activity boosted demand for oil, as did high prices for natural gas, which reached their highest level since February 2014 in October.
The ADB is a financial organization for the economic development of Asia and the Pacific. Its main objective is the eradication of poverty and provide aid to improve the standard of living of the population of the region through loans and technical collaboration.
On the supply side, a decision by oil exporters led by the Organization of the Petroleum Exporting Countries (OPEC +) to contain crude oil production further supported a rebound in oil prices, as did the supply disruption to the United States caused by Hurricane Ida in August and September.
However, according to the ADB, the rally in prices lost momentum in November on fears that the spread of the Omicron variant could derail the recovery in oil demand just as more supply hits the market.
Brent crude prices fell below $ 80 a barrel in the third week of November.
Nonetheless, OPEC + decided on December 2 to go ahead with its planned production increase in January, only for the price to fall further that week below $ 70 / barrel.
Despite market jitters, demand indicators remain positive and futures prices still point to a bull market, albeit to a lesser degree.
Brent crude prices are forecast to average $ 71 / barrel for the full year.