Global markets are currently underestimating the demand for oil as more economies open up for business, says a recent report by Goldman Sachs that expects Brent to hit $80 per barrel going ahead. Recently, S&P Global Platts, too, had forecast oil prices hitting and staying above $70 a barrel by mid-2021, driven by a more broad-based pickup in economic activity amid widening vaccination rollouts.
Mobility, according to Goldman Sachs too, is rapidly increasing in the US and Europe, as vaccinations accelerate and lockdowns are lifted, with freight and industrial activity also surging. This developed market (DM) recovery, Goldman Sachs said, is in fact larger than estimates, and is helping offset the recent hit to demand and the likely slower recovery in South Asia and Latin America.
Over the past one year, Brent crude oil prices have climbed nearly 85 per cent to $66 a barrel now, as the global economy opened for trade after a stringent lockdown triggered by the Covid-19 pandemic. Since March, the prices have been volatile on account of concerns over the pace and efficacy of vaccination, fresh Covid waves across emerging markets (EMs) and the return of Iranian barrels, with the latter pushing Brent prices down from $70 to $65 a barrel last week.