Good for oil prices! BP admits to underestimating the world's thirst for crude oil

BP now admits it may have underestimated the world's thirst
for oil.
Electrification of transportation is not cutting demand as fast
as some analysts predict.

Two years ago, at the height of the pandemic, BP wrote in its annual Energy Outlook that global oil demand peaked at about 100 million b/d in 2019 and that demand has only declined
since then due to the impact of the pandemic and the accelerated energy transition.
Just two years later, BP acknowledged that it may have underestimated the world's thirst for oil, even as the company bravely stuck to its long-term prediction that electrification of transportation would eventually usher in an era
of peak oil demand.

At the same time, other investment banks foresaw a rebound in crude oil demand, as this is something that happens naturally after
all the lockdown-induced pandemic depressions.
What they didn't foresee was the extent and speed
of the rebound.

Goldman Sachs CEO Jeffrey Currie said in a recent interview: "The market is changing faster than it was 3 or 6 months ago, and the fundamentals are more tense than we initially thought
.
" With the onset of summer, energy and food prices are currently under significant upward pressure
.
”

The U.
S.
Energy Information Administration recently predicted that Permian oil production would hit a record high this month, but that didn't appear to be enough to offset imbalances in the global oil market, with many U.
S.
producers saying they were unwilling — or unable — to raise production
because of shortages and delays.

U.
S.
production hasn't grown as much as some expected, nor as fast, as WTI soared above $100 and stayed there
.
The electrification of transportation has not weakened demand, as the pace of transportation electrification has been much
slower than expected.
Perhaps more importantly, OPEC+ may say it will increase production by 1 million barrels per day, but it is far from certain
whether that will translate into actual action.

These all seem necessary for a perfect oil storm, coupled with Libya's recent massive oil field disruptions
.
In fact, the situation is worse than almost everyone expected, and, perhaps more worryingly, supply constraints will continue for some time
as there is no immediate solution.

(Daily chart of Brent crude oil main contract)

At 15:09 Beijing time on June 20, the price of the main contract of Brent crude oil was 113.
46 US dollars / barrel
.