KUALA LUMPUR (Dec 20): High carbon prices and inflation will lead to an increase in global oil prices to US$380/bbl, according to Moscow-headquartered PJSC Lukoil Oil Co.

Russia’s second-largest producer in its long-term energy outlook released on Friday (Dec 17), said oil prices, taking into account the carbon price, will vary greatly.

Lukoil president V.U. Alekperov said 2021 has become very significant for the oil industry.

He said the global economy is gradually recovering from the crisis, and the volume of energy consumption is growing rapidly.

It is obvious that the forecasts made at the beginning of the pandemic emphasising that the world had already passed the peak of oil consumption in 2019, proved to be wrong, added the Lukoil president.

"On the contrary, we risk facing a global energy shortage due to years of underinvestment in the industry because of price shocks and ambition to stop using fossil fuels as soon as possible," he said.

Alekperov said that for many decades, the rise in energy consumption has been closely related to the rise in carbon dioxide emissions, which contributes to the heating of the planet's atmosphere.

He said maintaining the trend towards an increase in anthropogenic greenhouse gas emissions will be accompanied by an increase in the level of the world’s oceans, the intensification of hurricane activities and the melting of permafrost, i.e. huge losses for society.

He said despite the growth in electricity generation from renewable sources in recent years, fossil fuels account for more than 80% of the world's primary energy consumption.

Alekperov said the recent sharp rise in European gas prices is a clear indication of the continued dependence of industrialised countries on fossil fuels.

Oil demand gradually recovering

Lukoil said that as a result of Covid-19 restrictions, the demand for liquid hydrocarbons decreased by a record 18 mb/d in the second quarter of 2020

It said as restrictions are lifted, demand is gradually recovering, and that the oil demand in China has already exceeded the 2020 level.

The firm said oil prices in 2021 recovered after a sharp drop in the spring of 2020.

It said the coordinated actions of the Opec+ Agreement participants allowed oil prices at levels high enough to maintain investment activity in the oil industry.