The Impact of the Pandemic
Oil prices have been in a state of flux since the start of the Covid-19 pandemic in 2020. After a steep decline in demand, the price of oil per barrel dropped to a low of $20.37 in April 2020. The pandemic has caused oil prices to remain low throughout 2020 and into 2021. With the global economy still in a state of flux, the price of oil per barrel is expected to remain low in 2021.
OPEC Cuts and Production Caps
In an effort to boost oil prices, the Organization of the Petroleum Exporting Countries (OPEC) has imposed production cuts and caps on oil production. OPEC announced in April 2020 that it would cut production by 9.7 million barrels per day. OPEC’s production cuts have helped to stabilize oil prices, though they remain far lower than they were before the pandemic began.
The US Shale Oil Industry
The US shale oil industry is another factor that will influence the price of oil per barrel in 2021. The shale oil industry has been hit hard by the pandemic, with many producers forced to shut down operations. This has caused a major drop in shale oil production, resulting in less oil being available on the market. This, in turn, has helped to push up the price of oil per barrel.
Demand for Oil in 2021
The demand for oil is also expected to remain low in 2021 as the global economy continues to recover from the pandemic. Many countries are still in a state of lockdown, meaning that travel and other activities that require oil are still largely restricted. This has caused a decrease in the demand for oil, resulting in lower prices per barrel.
Geopolitical Uncertainty
Geopolitical tensions in the Middle East are also likely to have an impact on the price of oil per barrel in 2021. Tensions between the US and Iran, as well as between Saudi Arabia and Iran, could result in disruption to oil supplies in the region. This, in turn, could cause a spike in oil prices.
Outlook for 2021
Overall, the outlook for the price of oil per barrel in 2021 is uncertain. The global economy is still in a state of flux, and the pandemic is still having an effect on the demand for oil. OPEC’s production cuts have helped to stabilize oil prices, but the US shale oil industry has been hit hard by the pandemic. Geopolitical tensions in the Middle East could also cause disruption to the supply of oil, resulting in higher prices. As such, it is difficult to predict the exact price of oil per barrel in 2021.
Conclusion
In conclusion, the price of oil per barrel in 2021 is likely to remain low. The pandemic has had a major impact on the demand for oil, and production cuts by OPEC have helped to stabilize prices. However, the US shale oil industry is still suffering, and geopolitical tensions in the Middle East could cause disruption to the supply of oil. As such, it is difficult to predict the exact price of oil per barrel in 2021.
