Sushant Gupta of Wood Mackenzie on Tuesday said that there is an opportunity in coming quarters for OPEC to increase crude production.
“We think there will be an opportunity in coming quarters for OPEC to increase production. At the moment they are cutting around 7.8 million barrels per day of production. While if you look at the last year’s agreement, they should be only cutting 5.8. So they can potentially put 2 million barrels per day in the market and that will come in gradually. So, we expect 5.8 target to be reached somewhere around Q3 this year by gradual increase in production as the demand recovers through this year,” he said in an interview to CNBC-TV18.
He added that if OPEC gradually increases production, crude prices can be in the range of USD 67-68 per barrel.
Gupta said that Q3 demand is driven by gasoline and diesel. He also expects oil demand to recover soon.
“As the vaccine deployment in the major economies continues, we expect Q2, Q3 demand to be driven by gasoline and diesel. As personal mobility increases consumer confidence returns, and a critical mass gets vaccinated, we would expect oil demand to recover,” he said.
Gupta does not see a major impact on crude imports due to the Suez Canal situation. “Asia relies only about 3-5 percent of its crude imports from Suez Canal. There will be some reshuffling of crude imports, Asian buyer would use some more Middle Eastern crude in the next few months, but other than that we don’t expect a big reshuffling of the crude import or a bigger impact on the crude prices,” he said.Watch video for more.