JP Morgan said on Wednesday it expects excess capacity in the Organization of the Petroleum Exporting Countries (OPEC) to decline over the course of 2022, raising the risks of a sharp increase in crude prices.
The US investment bank expects that Oil prices rise It will reach $125 a barrel this year and $150 a barrel in 2023. “We see a growing recognition in the market of weak global investment in supply,” he said.
Oil prices hit two-month highs on Wednesday, supported by a supply shortage, as crude stocks in the United States, the world’s largest consumer, fell to their lowest levels since 2018.
The bank said in a note that assuming production at the current quotas, the surplus production capacity of OPEC will fall to 4% of the total production capacity by the fourth quarter in 2022, from 13%, in the third quarter in 2021.
He added that the weak investment within the OPEC + countries and the increasing demand for oil after the pandemic may lead to a potential energy crisis.