Fitch Solutions has held its Brent forecast at an annual average of $66 per barrel for 2021, although the balance of risk is now skewed to the upside.
“After a breakthrough at a key resistance level of $70/b, tight supplies and key indicators point to further gains. Vaccination rates continue to climb, and easing restrictions are increasing fuel consumption,” Fitch Solutions said in its Middle East Monitor.
Emerging markets will see the recovery in fuel consumption pushed to 2022 on the back of delayed vaccinations.
Seasonal consumption is anticipated to be higher than normal given the dearth of international travel increasing miles driven domestically.
The potential return of Iranian barrels remains the key supply-side risk, with Opec+ increasing output in June and July and little chance of a rapid recovery in US shale.
In terms of energy prices and Qatar, Fitch Solutions said, Qatar’s fiscal position will benefit from rising energy prices on the back of a global economic recovery. A combination of tight supply management of oil markets by Opec+ coupled with a pick-up in the global vaccinations and bullish market sentiment have already prompted a rebound in global energy prices, with Brent trading at $68.7/barrel on May 25, from an average of $43.2/b in 2020.
The coming online of a new phase of the Barzan gas field in Q1, 2021 will also contribute to the country’s growth in revenues, with Fitch Solutions’ Oil & Gas team forecasting gas output to increase 5.0% in 2021.
As hydrocarbons account for over 80% of the total revenues, with the majority stemming from natural gas exports, the combined increase in hydrocarbon prices and production will offer significant tailwinds to Qatar’s fiscal intakes.
Thus, Fitch Solutions’ forecast oil revenues to bounce back from a 21.6% contraction in 2020 to a 30.5% growth in 2021.