What do higher oil prices mean for the energy sector?
Global crude prices have soared on supply worries caused by Russia’s invasion of Ukraine. The conflict is highlighting the tightness of crude stocks and persistently robust demand (short-term disruptions notwithstanding). With oil prices likely to stay high, support for energy stocks could continue, says Research Analyst Noah Barrett.
- With Russia a top-three producer of global crude, the country’s invasion of Ukraine has created worries about a steep drop in oil supplies at a time when demand for crude continues to recover from pandemic lows.
- Indeed, the Russia/Ukraine conflict has cast a light on the tightness of global oil supplies after years of under-investment by the energy industry. Meanwhile, demand for crude is expected to rise over the coming decade.
- In our view, the supply/demand imbalance could keep oil prices elevated and create a positive backdrop for the energy sector, particularly exploration and production companies.