Oil prices will remain below $60 a barrel but are likely to pick up in the second half of the year, according to a new report released by consulting firm PwC.
“Even though oil prices have lately recovered from the lows in 2020, we think that they will continue to remain relatively subdued,” PwC said in its Global Economic Outlook 2021.
Unless there are any shocks or geopolitical developments in the Middle East, oil demand, particularly from economies in the northern hemisphere, is likely to remain subdued for the first six months of the year even if it has recently picked up in China, PwC said.
The consulting firm estimated that prices are more likely to increase in the second half of 2021 as the COVID-19 vaccine becomes more widespread and economic activity accelerates.
A similar trend is expected for oil output levels, with supply expected to stay well below pre-crisis levels in the first half of the year before rising gradually as demand returns.
- Renewables power generation to accelerate
However, PwC said that electricity production from renewables is projected to continue to gather momentum.
Although the dominant source of electricity generation is fossil fuels, PwC estimated that solar PV (Solar Photovoltaics) capacity will rise rapidly on the back of rising capacity in the EU, India and China.
“If current trends continue, solar PV capacity is on course to surpass natural gas in 2023 and coal in 2024 in the global electricity sector,” it said.
In the coming decades, PwC said regional attempts to curb carbon emissions, like the EU Green New Deal, and international agreements, like the Paris Agreement, would require significant volumes of green infrastructure investment.
“Green bonds, which are used to directly finance environmental projects, currently make up less than 5% of the global fixed income market. In 2021 we expect total green bond issuance will top half a trillion US dollars for the first time,” it said.
This trend is further likely to be helped by the EU Green Bond Standard, which is expected to bring a level of standardization to these financial instruments.
By Sibel Morrow