World's largest oil trader: Oil prices are expected to remain above $100 "for the long term"

Russell Hardy, CEO of Vitol Group, the world's largest independent oil trader, said in an interview that oil prices could remain above
$100 a barrel "for a long time" in the next 6 to 9 months as global demand sets a new record this year.

Earlier this month, crude oil prices surged to levels close to $100 as the global economy recovered from the pandemic and supply was constrained
.
Hardy said that the market supply and demand will become tighter, and by the end of 2022, daily oil consumption will be much higher than pre-pandemic levels
.

"Consumption is likely to exceed 100 million barrels this year," Hardy said, "and demand will surge
in the second half of the year if the travel industry continues to return to normal.
" ”

Energy supplies are struggling to keep up with a strong economic recovery, but many OPEC+ members are unable to restore all output
due to underinvestment and supply disruptions.
Meanwhile, companies ranging from U.
S.
shale oil drilling companies to global supergiants are focused on handing out cash to shareholders rather than boosting production
.

This led to higher oil prices and sent inflation soaring
.
This situation threatens to derail the global economic recovery and create a cost-of-living crisis
for millions.

Hardy said: "The market needs more crude oil
.
With demand set to rise by 1 million or 2 million barrels per day by the end of the year from end-2019 levels, the system as a whole will be quite tight
.
”

In addition, the "spot premium" phenomenon on oil futures, which is now prevalent in
crude oil, diesel, natural gas and coal, is further evidence of market nervousness.
Hardy said: "The fact that all markets are very lagging at the moment shows that the whole system has not much room for manoeuvre
.
”

The recovery of supply and demand has been uneven

However, from the perspective of the overall market, the recovery in fuel demand has been uneven
.
In petroleum products, Vitol said the current level of gasoline consumption in the United States is about 400,000 barrels
less than in February 2019.

Hardy said: "We still think working from home has influenced this demand
.
High prices may also encourage drivers to use fewer cars
.
”

Conversely, industrial transportation using diesel is driving demand, but jet fuel consumption remains limited
due to the lack of long-haul flights.

In terms of output, Hardy said oil supply is growing, just not as fast
as on the demand side.
U.
S.
shale oil is also growing, but not to boom-era levels
.
Hardy said drilling companies' funding constraints and staffing shortages also hampered production
.

Hardy said OPEC+ is gradually ramping up production, and the nuclear deal with the United States may allow Iran to produce an additional 1 million barrels of oil per day, but this capacity has been considered by the market in the second half of the year
.

"Eventually, we will run out of spare capacity
.
The extent to which this scenario will raise concerns is something the market wants to figure out
.
”