Commerzbank sees Brent at $75/b end 2021, expects OPEC+ deal

Quantum Commodity Intelligence – Germany's Commerzbank is expecting Brent crude oil to close the year at $75/barrel in its most likely scenario based on OPEC+ production increases, the bank said in a report released Wednesday.

Commerzbank said it still sees the most likely scenario as an OPEC+ agreement on the gradual expansion of oil production, despite the current stalemate. 

"We still expect an agreement on an appropriate increase in output. The price of Brent oil should end the year at USD 75 per barrel," said the report.

Saudi Arabia and UAE remain deadlocked on the proposed deal to add 400,000 bpd in August and a total of 2 million barrels by the end of the year.

Noting that market balances will significantly tighten without the addition of the proposed OPEC+ hikes, Commerzbank said there was a mutual interest in finding a solution to breaking the deadlock.

"An oil price level that is too high and has a negative impact on demand is hardly in the interest of OPEC+. Moreover, it remains to be seen whether shale oil producers in the USA will continue to react so reluctantly if oil prices continue to rise.

"Saudi Arabia therefore still seems to be interested in an amicable solution."

The IEA Tuesday reiterated a warning that oil markets will "tighten significantly" unless OPEC+ can find a compromise and resolve the current stalemate.

The Paris-based energy watchdog also said global oil demand surged 3.2 million bpd in June from May to reach 96.8 million bpd.