KUALA LUMPUR: Moody’s Investors Service has revised its outlook for the medium-term oil price range upwards to US $ 50-70 per barrel to reflect its expectation of a continued increase in the cost of production in line with the recovery of the demand.
“We are now returning to the mid-term price range we had before the coronavirus pandemic,” Senior Vice President Elena Nadtotchi said today in a statement.
She said the credit rating agency also expected tight supply to continue to support the strong momentum in oil prices.
Nadtotchi said the upstream energy sector continues to invest well below pre-pandemic levels despite the sharp turnaround in oil and natural gas prices in 2021.
“Exploration and production (E&P) companies are reporting continued spending restraint in 2022,” she said.
She said upstream spending only increased slightly after a sharp 30% drop in 2020.
“Producers still plan to invest prudently in 2022, but we expect modest spending growth due to high commodity prices,” she said.
Meanwhile, Vice President Sajjad Alam said the analysis showed that upstream companies would need to significantly increase their spending in the medium term to fully replace reserves and avoid a decline in future production.
“The large independent E&P, integrated and national oil companies will all maintain disciplined production through 2022, gradually increasing supply to match return demand with the pace and extent of production increases varying by company. and the region, ”he added. – Bernama