Government Urgently Reviews International Oil Price Trends: "Low Possibility of Surpassing $100"

Ministry of Industry Holds the 97th International Oil Price Experts Meeting

[Sejong=Asia Economy Reporter Kwon Haeyoung] As international oil prices recently reached their highest point in two years, the government has launched an urgent review of international oil price trends.

The Ministry of Trade, Industry and Energy held the 97th International Oil Price Experts Council to examine the factors behind the rise in international oil prices in the first half of the year and to forecast the domestic and international oil markets for the second half.

The International Oil Price Experts Council is a public-private consultative body established in 2004 to review factors driving oil price increases in preparation for high oil prices. After presentations on specific topics, each member discusses oil market forecasts through open debate. This meeting was held as international oil prices recovered to the $70 per barrel range and surged sharply beyond the $40-$56 range predicted by many institutions at the end of last year.

Yoo Beopmin, Director of Resource Industry Policy at the Ministry of Trade, Industry and Energy, stated, "There is significant uncertainty in the oil market due to factors such as the recovery in oil demand after COVID-19 and the OPEC Plus (OPEC+) production cut agreement. We will review the factors driving the rise in international oil prices and monitor them closely."

Participants from the Korea Energy Economics Institute, the International Finance Center, and S&P Platts analyzed that the rise in international oil prices in the first half was due to ▲ supply reductions following adjustments to OPEC+ production cut plans ▲ COVID-19 vaccine distribution and major countries' economic stimulus measures ▲ a weaker US dollar. For the second half, international oil prices are expected to fluctuate depending on whether OPEC+ increases production, the Iran nuclear negotiations, and the US Federal Reserve's tapering implementation, but at the current level, the 2021 annual average international oil price is projected to be formed between $64 and $69 per barrel. The Korea Energy Economics Institute forecasted that Dubai crude oil prices could rise to $74.67 per barrel in the third quarter and $76.66 per barrel in the fourth quarter, which translates to an annual average of $69.61 for 2021.

Oh Jungseok, Deputy Director of the International Finance Center, said, "It cannot be ruled out that oil prices may exceed $80 per barrel during the summer season," adding, "Given the current supply and demand conditions, the possibility of prices exceeding $100 is low."