JP Morgan sees OPEC spare capacity falling through 2022


The logo of the Organization of the Petroleum Exporting Countries (OPEC) is pictured on the wall of the new OPEC headquarters in Vienna March 16, 2010. REUTERS/Heinz-Peter Bader

Jan 12 (Reuters) – JP Morgan said on Wednesday it expects spare capacity at the Organization of the Petroleum Exporting Countries to decline through 2022, driving a higher risk premium on oil prices .

JPM forecasts oil prices to rise to $125 a barrel this year and $150 a barrel in 2023. “We are seeing growing market recognition of global underinvestment in supply,” the bank said.

Oil prices hit two-month highs on Wednesday on tight supply as crude inventories in the United States, the world’s largest consumer, fell to their lowest since 2018. A weaker dollar and the Alleviation of concerns over the Omicron variant of the coronavirus were also factors.

Assuming production at prevailing quotas, OPEC spare capacity will fall to 4% of total production capacity by the fourth quarter of 2022, from 13% in the third quarter of 2021, the US investment bank said. in a note.

JPM said it comes at a critical time as other global producers falter. The combination of underinvestment within OPEC+ countries and growing demand for oil post-pandemic could lead to a potential energy crisis.

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Reporting by Ashitha Shivaprasad in Bengaluru; Editing by Cynthia Osterman

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