OPEC warns gas price hike may spark oil market turbulence
Iraq expects higher demand for crude as the shortfall of gas forces consumers to look for alternative fuels, Oil Minister Ihsan Abdul Jabbar said on Wednesday.
The head of Nigeria’s state oil firm, Mele Kyari, predicted that petroleum demand could be boosted by 1 million barrels a day, with prices potentially gaining $10 a barrel over the next six months.
While the two exporters are not neutral observers of the situation, their views echo thinking that is increasingly widespread in the market. Brent futures are already at $75 (€65) a barrel, approaching this year’s peak.
Goldman Sachs Group Inc. said that a cold winter could overwhelm the oil market’s capacity to make up for missing gas supplies, resulting in a price spike with repercussions for the economy. Almost 2 million barrels of oil a day could be needed for a mixture of power generation and industrial purposes, the bank said.
In such an extreme scenario, OPEC and its partners could benefit, as they still had plenty of crude supplies shuttered when the pandemic struck last year.
It could be a particularly golden opportunity for Baghdad, which is eager to maximise sales after being hit by years of conflict.
“If there is agreement within OPEC, we will be ready,” Iraq’s Jabbar said.