Oil & Gas Sector Update - Covid-19 Surge May Cap, But OPEC+ Cuts To Support Oil Price: ICICI Securities

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ICICI Securities Report

Organization of the Petroleum Exporting Countries has decided to prune output cuts and Saudi Arabia its additional output cut of one million barrel per day and ramp up by 2.15 million b/d during May-July 2021.

International Energy Agency estimates global demand to rise by 5.8 million b/d in Q4 CY21E from Q1 levels, supply by 4.2 million b/d during the same period and supply deficit to be at 0.7-2.8m b/d in Q1-Q4 CY21E.

Surge in Covid-19 cases in Europe and India may mean lower global demand and U.S. lifting sanctions on Iran may mean supply is higher than estimated.

However, we expect OPEC+ to deepen cuts, if required, to ensure supply deficit until demand recovers and to make up for any rise in supply from Iran.

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