Oil demand will reach ‘pre-COVID levels’: former Shell Oil president

After a rough year, oil prices are looking at better days.

This is according to former Shell Oil president John Hofmeister, who told “Mornings with Maria” on Monday that he predicts there will be a “healthy price increase” in oil later in 2021 or 2022.

“People have a revamped desire for mobility,” Hofmeister stressed, adding that he believes oil demand will ‘reach pre-COVID levels’ and ‘when it returns, we will boost oil prices.’

As the coronavirus pandemic forced the U.S. economy to a standstill and kept most workers at home, mobility declined, taking away about ‘10% of demand ‘from the industry.

‘People have a pent-up desire for mobility and I think that when mobility starts to return, whether it’s commuting to the office, whether it’s working or traveling for pleasure, I think everyone’s going to feel better and do better, and I think it will take the demand for oil back to the level before COVID, ‘he added.

While the coronavirus pandemic raged in April, there was a historic drop in the oil price following a supply wave that left the world full of roughness and ran out of places to store it.

West Texas Intermediate Crude Oil futures for May delivery plunged 305% to -36.73 a barrel in April as traders closed positions before the May contract expired.

However, amid recent signs of progress with a COVID-19 vaccine, oil prices have recovered slightly.

FedEx sent the second coronavirus vaccine candidate last week to obtain emergency approval in the US after Moderna, a biotechnology company in Massachusetts, received the authorization for its vaccine candidate from an FDA advisory panel.

On December 14, the first shots were fired from Pfizer and BioNTech’s coronavirus vaccine, with initial samples of the country’s nearly 3 million doses going to health workers in several states.

Despite the advanced vaccine, more U.S. employees still uncomfortable returning to work: survey

Hofmeister admits that he believes that “it’s going to be more of a drop” and that he does not think there will be a “sudden increase in demand.”

“But keep in mind that one of the realities of the oil market is that the major investment firms, the producers, have reduced their capital expenditure, so the capital expenditure to increase production is basically not there,” Hofmeister noted.

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“It’s going to put pressure on the existing supply chain, and I think we’ll probably see a fairly healthy price increase later this year, probably in 2022.”

On Monday, the West American intermediate crude, the U.S. benchmark, slipped 9 cents to $ 48.14 a barrel.

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FOX Business’ Jonathan Garber, Evie Fordham and Associated Press contributed to this report.