The International Monetary Fund expects oil prices to rebound to an average of $50 per barrel this year, which is nearly 20 per cent higher than 2020 levels, amid vaccine rollouts and growth in the global economy.
Brent, the international benchmark, declined by an average of nearly 25 per cent last year, as demand crumbled due to mobility restrictions imposed in an attempt to stop the spread of the Covid-19 pandemic.
The Washington-based lender cautioned, however, that average prices for 2021 will remain "well below" the average for 2019. The IMF expects prices to average $48.80 per barrel in 2022.
The IMF revised its expectations for global economic growth upwards to 5.5 per cent, a 0.3 per cent increase from its October forecast. The global economy is expected to grow after a contraction of 3.5 per cent in 2020 due to the debilitating impact of the pandemic on global trade and supply chains.
Growth for 2022 is expected to slow to 4.2 per cent.
Oil exporters and tourism-based economies within the group are expected to face "particularly difficult prospects", the IMF said, citing the "slow normalisation" of cross-border travel and a subdued outlook for crude prices.
On Tuesday, Germany, Europe's largest economy, said it was weighing up whether to stop all air travel to contain mutations of the Covid-19 virus.
Brent was up 0.55 per cent, trading at $56.19 per barrel at 6.32 pm UAE time. West Texas Intermediate, which tracks US crude, was up 0.44 per cent at $53 per barrel.