Oil demand will reach ‘pre-COVID levels’: ex-president of Shell Oil

After a difficult year, oil prices look better.

This according to ex-Shell Oil President John Hofmeister, who told Mornings with Maria on Monday that he predicts that there will likely be a “healthy increase in the price of oil” in late 2021 or 2022.

“People have a repressed desire for mobility,” emphasized Hofmeister, adding that he believes that demand for oil will reach “pre-COVID levels” and “when that comes back, we will see a strengthening in oil prices”.

As the coronavirus pandemic forced the United States economy to a standstill and kept most workers at home, mobility fell, taking away about “10% of demand” from the industry, he noted.

“People have a repressed desire for mobility and I think that when that mobility starts to come back, whether to go to the office, or to travel for business or leisure, I think everyone will feel better and do better and I think that will lead to oil demand back to pre-COVID levels, “he added.

In April, as the coronavirus pandemic spread, there was a historic drop in oil prices in the wake of a supply wave that left the world flooded with oil and running out of places to store it.

West Texas Intermediate crude futures for May delivery plunged 305% to -36.73 a barrel in April, with traders offloading positions before the contract expired in May.

Amid recent signs of progress on a COVID-19 vaccine, however, oil prices have recovered somewhat.

FedEx began shipping the second coronavirus candidate vaccine to obtain emergency clearance in the United States last week after Moderna, a Massachusetts-based biotechnology company, received authorization for its candidate vaccine from an FDA advisory panel. .

On December 14, the first injections of the coronavirus vaccine from Pfizer and BioNTech were administered, with the initial jabs of nearly 3 million doses in the country going to healthcare professionals in several states.

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Hofmeister acknowledged that he believes “it will be more of a trickle” and that he does not think there will be “a sudden increase in demand”.

“But keep in mind that one of the realities of the oil market is that the big investor companies, the producers, have cut capital expenditures a lot, so as demand increases, capital expenditures to increase production are basically not over there”. Hofmeister observed.

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“This is going to put pressure on the existing supply chain, so I think we’ll see maybe later this year, probably in 2022, probably some pretty healthy price hikes.”

On Monday, West Texas Intermediate crude, the US benchmark, fell 9 cents to $ 48.14 a barrel.

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Jonathan Garber, Evie Fordham and the Associated Press of FOX Business contributed to this report.