Socar Trading expects crude to hit $100/b by end 2022 on lack of investment

Crude oil is likely to rise to $100/b by the end of 2022 on lack of investment in the sector and the slow pace of moving away from fossil fuels as part of the energy transition, the CEO of the trading arm of Azerbaijan's state oil company told S&P Global Platts in an interview Sept. 23.

Socar Trading is expanding its Houston office on the expectation that the US will expand its crude production and remain one of the largest producers in the world, Socar Trading CEO Mariam Almaszade said in the interview. Socar Trading currently trades about 1 million b/d of crude, with about 40% from Azerbaijan and the rest from third parties including Russia, the US and parts of Africa.

US oil production is expected to grow this year and in 2022 on the back of increased activity led by small and private operators, with drilling and completion activity on the rise, according to Platts Analytics. US oil production bottomed out at around 11.1 million b/d in April, it noted. Crude and condensates output will rise 450,000 b/d on the year to average 11.1 million b/d this year and go up by another 890,000 b/d in 2022 to 11.9 million b/d, Platts Analytics said in an Aug. 26 report.

"We are hopeful will can trade more crude," Socar's Almaszade said, adding that two traders were hired in September at the Houston office. Socar Trading also began trading natural gas in 2019 with monthly volume for the past four months averaging 3.3 Mmbtu with sales to Italy, while LNG was added five years ago and trades about 4 million cu m/year, she said.

"We are bullish [on] crude," Almaszade said. "There is a lack of investment and the process of the energy transition will require more consensus, which will take time to develop."

Socar Trading is currently in talks with banks to provide carbon-free LNG through carbon offsets, she said.