In 2022, the world may face ultra-high oil prices, analysts have promised, Russian Vedomosti newspaper reported, citing data from a study by Sanford C. Bernstein & Co. The reason for the jump may be the underinvestment of the industry.
According to experts, there are fewer and fewer discovered traditional reserves in the world: last year their area reached a minimum in a decade (408,000 square meters). The decline in new discoveries is driven in part by the COVID-19 pandemic, but also by countries' policies to meet climate targets under the Paris Agreement.
This affected the activities of market giants: Shell reduced its portfolio of oil projects, Equinor and BP abandoned offshore sites in Canada, and Wintershall Dea withdrew from projects in Argentina and Brazil. In 2022, the development of new oil projects has a rather low potential amid rising inflation. At the same time, the demand for oil in the world is not decreasing. So this risks leading to a price spike, as it already did in 2004-2014.
A recent report by Saxo Bank says that the green transition is a danger to the global economy and is further fueling the world's energy crisis. One of the main obstacles to growth is the lack of investment in fossil fuels, which are still the main source of energy, because new sources can not yet replace them.