Macro oils short-term outlook: March 2022 Report

Commodity Market Report 04 March 2022

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Report summary

In this Monthly Update, we have adjusted historical demand upward which lifts the total. The price forecast has also been revised upward to reflect the risk premium which developed as a result of the sanctions put in place against Russia in late-February. Russia is the world’s second largest oil producer at 11 million b/d of crude oil and condensate and its oil exports total about 4.6 million b/d, just under 5% of 100 million b/d of world supply. Highlights of this short term outlook include: • IEA crude stock release timing uncertain • US rig additions have slowed but production recovers through the year • OPEC production forecast shows gains in 2022 • Russia oil production outlook and risks • Demand recovering from the Covid impact

Global supply: risks to oil supply dominated by sanctions and Iran nuclear talks
- Russia: production at risk from wide ranging sanctions
- Raft of sanctions introduced against Russia
- Risks to Russia crude oil supply
- Non-OPEC Supply: upgrades to US NGLs offset downgrades to GoM, Russia and Canada in 2022
- US Lower 48: high oil prices boost drilling outside of the Permian
- OPEC: production increases rolled over as planned for OPEC+, despite market volatility
Global demand: 2022, 2023 demand raised on alignment to our long-term outlook; recovery pace at risk amid recent oil price escalation
- Long-term to short-term outlook alignment in the wake of IEA adjustments
- 2022: Global demand to reach above 100 million b/d by Q2 2022
- 2023: Global demand eclipses 103 million b/d on stronger transport fuel recovery
- Risks to the outlook