Vaccines to boost 2021 oil demand and prices: Trafigura

  • : Crude oil, Oil products
  • 20/12/17

Trading firm Trafigura expects "very strong" oil demand growth will help push crude prices up to $55-60/bl by the end of 2021, assuming "the proper rollout" of Covid-19 vaccines happens by the middle of the summer, the company's chief economist Saad Rahim told Argus.

"You have already seen a strong recovery in many places — certainly in China, but also in Europe and Japan, for example. The US is lagging in some parts, but I think we can see some stronger momentum. India had taken a major hit, but the momentum there is also looking strong," Rahim said. "This is before you really have the effect of another round of stimulus policies out of Europe and potentially the US. And this is before you have the proper rollout of the Covid-19 vaccines."

On the supply side, Rahim said he thinks the US is "some way away" from rigs being deployed at levels that will allow production "to really grow ... rather than just slow the decline". And at the same time, while Opec+ countries are bringing some crude supply back in January, they are not flooding the market, he said.

Libya, which is exempt from Opec+ quotas and whose output has recovered rapidly since the end of port and field blockades a few months ago, is unlikely to have a significant impact on market rebalancing, according to Rahim.

"The Libyan volumes have come on very quickly, so they are not really going to add many more barrels there. And the market has absorbed those volumes, meaning that demand is already looking much healthier," he said.

A third way

Trafigura traded 5.6mn b/d of crude and oil products in its financial year to 30 September, the strongest in its 27-year history thanks to increased volatility caused by the Covid-19 pandemic. The firm does not set targets for oil volumes and does not want to "ever chase empty barrels", instead focusing on "the most profitable barrels that are there and make sure we hit the margin", Rahim said.

While oil and metals remain the firm's key revenue generators, Trafigura has launched "a third pillar of our business, around renewables and power, recognising the shift that is taking place", Rahim said.

A world in which Trafigura's power and renewables business becomes its key revenue generator would be "a very interesting development, because it does mean that our metals business is also probably growing very rapidly" thanks to high demand for metals in the energy transition, he said. "For us as a diversified and integrated company, it would be a very interesting development. But we still expect oil to remain the key revenue generator in the next 4-5 years."

A transcript of our interview with Saad Rahim will be published in this week's issues of Petroleum Argusand Argus Global Markets. He will also be one of the speakers at the Argus Crude Live virtual conference taking place on 26-28 January, 2021. For full details of the conference programme and how to register to attend, please visit

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