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2021 INTEGRATED MANAGEMENT REPORT
4.2 INDUSTRY ENVIRONMENT
CRUDE OIL (BRENT) PRICE AND SUPPLY Brent crude oil price trend over the last two years is shown below:
BRENT $/BBL.
In 2020, Brent crude oil prices fell considerably due to the pandemic and the mobility restrictions imposed globally to control the virus, causing a sharp contraction in demand. This prompted OPEC+ to restrict production in order to control oil stock levels and restore the supply-demand balance. In 2021, COVID-19 continued to impact the market and generate uncertainty, and OPEC+ has therefore partially maintained its restrictions, although these have been eased (as from July 2021, production quotas were increased by 400 Kb/d). This, together with the gradual elimination of mobility restrictions, allowed demand for crude oil to outstrip production causing prices to rise and stay high for much of the year.
Global oil production increased by 0.7 Mb/d in 2021 compared to 2020 and is expected to grow by 2.5 Mb/d in 2022 and 2.6 Mb/d in 2023, provided the remaining production restrictions are lifted.
In 2021, due partly to growing demand and also to controlled crude oil production, consumption outpaced production, resulting in a significant decline in global crude oil inventories. Uncertainty in the markets is currently latent due to the new COVID-19 variant, Omicron, which is causing some countries to restrict mobility to control its spread, reducing consumption and thus causing prices to fall again. In February 2022, at its 25th Ministerial Meeting, OPEC+ agreed to increase production quotas by a further 400 Kb/d as of March, although it is monitoring the effects of the new variant on the markets to modify the agreed strategy if necessary.
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