Forbe outlook for the oil market in 2021

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Hope is in the air – we continue to expect an exceptional year for oil demand growth, up 6.6 million b/d as the global economy rebounds. OPEC+ enters 2021 constraining supply and nursing the market back into balance. The 0.5 million b/d increase of supply from January, cobbled together as a compromise by the group, will go toward meeting resurgent demand. We think Brent will move above US$55/bbl by end 2021.

The risks? More delays in controlling the pandemic would stall demand recovery. Iran looms large on the horizon. Iran may be tempted in coming months to increase exports from today’s minimal levels to test the geopolitics, adding to the challenges of OPEC+. Were sanctions to be lifted – unlikely until 2022 at the earliest – up to 1 million b/d of crude could return to market within months.

The Biden administration could decide to return the US into the international deal. Any negotiations are not likely to begin until after Iran’s own presidential election in June 2021, and Iran must first comply with the significant hurdle of the Joint Comprehensive Plan of Action (the Iran deal).