BAKU, Azerbaijan, Jan.12
By Leman Zeynalova – Trend:
An upside risk to energy prices is low investment in new production capacity, which may prove insufficient to keep pace with demand, Trend reports with reference to the World Bank (WB).
The WB analysts believe that to avoid future energy price spikes, investment in low-carbon sources of energy would need to increase markedly, or growth in energy demand would need to slow.
“Despite a planned increase in production by the member countries of OPEC+, global oil output rebounded more slowly than expected owing to supply outages and production constraints, in addition to a muted response to higher prices by U.S. shale oil production. Oil prices are expected to average $74/bbl in 2022 before declining to $65/bbl in 2023 as global production recovers,” reads the Global Economic Prospects report released by WB.
The report says that the surge in COVID-19 infections caused by the Omicron variant is currently expected to have a modest, temporary impact on oil demand, largely because pandemic control measures have become less restrictive.
“Nonetheless, additional economic disruptions from pandemic resurgence, including due to new variants, remain a key downside risk to oil demand. Oil prices rose to an average of $69/bbl in 2021— an increase of 67 percent over 2020 and $7/bbl higher than previously expected as oil demand recovered, boosted by higher natural gas prices which encouraged the use of oil as a substitute,” said the World Bank.
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