Fitch Solutions, a leading provider of credit intelligence, has kept its Brent crude forecast for 2021 at an annual average of $66 per barrel, even though the balance of risk is now skewed to the upside.
“After a breakthrough at a key resistance level of $70/b, tight supplies and key indicators point to further gains. Vaccination rates continue to climb, and easing restrictions are increasing fuel consumption,” Fitch Solutions said in its Middle East Monitor.
According to the financial information provider, the emerging markets will witness the recovery in fuel consumption pushed to 2022 on the back of delayed vaccinations. However, the seasonal consumption is expected to be higher than normal considering the lack of international travel increasing miles driven domestically.
Qatar’s fiscal position will benefit from rising energy prices on the back of a global economic recovery, Fitch Solutions said. A combination of tight supply management of oil markets by OPEC+ along with an increase in the global vaccinations and bullish market sentiment has already prompted a rebound in global energy prices, with Brent trading at $68.7/b on May 25, from an average of $43.2/b in 2020.
The launch of a new phase of the Barzan gas field in the first quarter of 2021 will also contribute to the country’s growth in revenues, with Fitch Solutions’ Oil & Gas team forecasting gas output to increase 5.0 percent in 2021.
The combined increase in hydrocarbon prices and production will offer significant gust to Qatar’s fiscal intakes, as hydrocarbons account for over 80 percent of the total revenues, with the majority from natural gas exports. Fitch Solutions forecast oil revenues to bounce back from a 21.6 percent contraction in 2020 to a 30.5 percent growth in 2021.
In its June report, Fitch anticipated Brent averaging $66 per barrel this year, $64 per barrel in 2022, $65 per barrel in 2023, $70 per barrel in 2024, and $72 per barrel in 2025. These forecasts are the same as the ones in the company’s May report.
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