The current shortage of natural gas and soaring prices in gas markets could be a boon for OPEC, which expects increased demand for other fuels as gas prices hit record highs for this period of the year in Europe and Asia.
Nigeria, Africa’s largest oil producer and exporter, is seeing soaring gas prices seep into oil prices because consumers would be forced to look for alternative fuels to natural gas this winter, said Mele Kyari, Managing Director of the Nigerian National Petroleum Corporation (NNPC). Bloomberg Television in an interview Wednesday.
Demand for oil could increase by up to 1 million barrels per day (bpd) due to the gas crisis, Kyari, adding that the gas crisis could push oil prices up by around $ 10 a barrel over the course of over the next three to six months.
Iraq, OPEC’s second-largest oil producer after Saudi Arabia, also believes demand for crude will rise due to the gas shortage, Iraqi Oil Minister Ihsan Abdul Jabbar Ismaael told Bloomberg.
Rising demand for oil will be good news for OPEC, which is looking to ease its cuts by 400,000 bpd each month until it rolls back all collective cuts at some point next year. Before the gas crisis hit Europe, analysts doubted OPEC could stay the course of monthly additions to the market given the resurgence of COVID in recent months.
Earlier this week, Goldman Sachs said that a colder winter and soaring global natural gas prices could result in higher than expected oil prices at the end of this year, with oil potential reaching 85 $ per barrel in the fourth quarter.
“The tightening of global gas supplies creates a clear and potentially significant bullish catalyst for the oil market this winter, greater than the risk of declining global oil demand from another Delta-type COVID wave,” wrote the Goldman Sachs analysts in a note on Sunday.
Early Wednesday, oil prices rose more than 1%, with Brent crude trading above $ 75.
By Tsvetana Paraskova for OilUSD
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