J.P. Morgan stated on Wednesday that it expects the spare production capacity within the Organization of the Petroleum Exporting Countries (OPEC) to decrease throughout 2022, which increases the risks of a sharp rise in crude oil prices. The American investment bank anticipates that oil prices will reach $125 per barrel this year and $150 per barrel in 2023. It noted, "We see a growing recognition in the market of the weak global investment in supply."
Oil prices hit a two-month high on Wednesday, supported by a supply shortage as U.S. crude inventories, the world’s largest consumer, fell to their lowest levels since 2018. The bank mentioned in a note that assuming production at current quotas, OPEC's spare capacity would drop to 4% of total production capacity by Q4 2022, down from 13% in Q3 2021. It added that weak investment within OPEC+ countries and increasing oil demand post-pandemic could lead to a potential energy crisis.
