Baker Hughes: Oil Market Faces“Unusual Set of Circumstances”
Baker Hughes missed analyst forecasts of adjusted earnings as it reported on Wednesday a set of what it said were “mixed results”
for the second quarter of 2022 due to supply-chain inflation and revenue losses from the suspension of its operations in Russia.
Looking ahead, Baker Hughes sees the oil market facing “an unusual set of circumstances and challenges” for the rest of this year and into next year, Simonelli said.
On the one hand, we have a deteriorating demand outlook for oil over the next year and a half due to high inflation and aggressive interest rate hikes to fight that inflation, Baker Hughes says.
“On the other hand, due to years of underinvestment globally and the potential need to replace Russian barrels, broader supply constraints can realistically keep commodity prices at elevated levels even in a scenario of moderate demand destruction,” Simonelli added.
“As a result, we believe the outlook for oil prices remains volatile, but still supportive of strong activity levels as higher spending is required to re-order the global energy map and likely offsets demand destruction in most recessionary scenarios,” the executive said.