Oil prices could reach a new high record, as demand recovers rapidly; according to a statement by the Bank Of America on Sunday; posted also by Reuters, oil prices could hit as much as $100 per barrel sometime in 2022.
Firstly, the Bank of America report said. “We believe that the robust global oil demand recovery will outpace supply growth over the next 18 months; further draining inventories and setting the stage for higher oil prices.”
Secondly, it is not the first time the bank sets higher forecasts for oil prices; according to Reuters, the Bank raised its Brent crude oil price forecast from $63 per barrel, to $68, for the current year. For 2022, the Bank expects Brent to reach $75 average; versus a previous estimate of $60.
Thirdly, the Bank also noted that U.S. shale will likely respond to these higher prices by ramping up production; consequently, Brent would roll back down to average $65 per barrel by 2023.
Nevertheless, the overall market will most likely remain under a deficit, according to the bank; it will endure a shortfall of 0.9 million barrels per day (bpd) over the next six quarters, it said.
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Oil prices could be hit if OPEC+ and Iran flood the market
Moreover, the bank expects that consumption will grow and rebound strongly this year and next; by 5.6 million and 3.6 million bpd respectively, the fastest growth rate since at least the 1970s.
In addition, this forecast comes after OPEC+ is considering ramping up production starting in July; while Iran is also getting ready to re-enter the oil market as market sanctions disappear. Consequently, the bank cautioned that ample OPEC+ spare capacity; and the return of Iran barrels will cap oil prices this year.
Furthermore, this Monday oil prices edged higher; underpinned by strong demand during the summer driving season; and a pause in talks to revive the Iran nuclear deal that could lead to a resumption of crude supplies from the OPEC producer, as said above.
Finally, this Monday Brent closed at $74,90, with a gain of $1,39 or 1,9%; while the West Texas Intermediate, closed at $73,66; with a gain of $2,02 or 2,8 per cent. Both benchmarks have risen for the past four weeks on optimism over the pace of global COVID-19 vaccinations and expected pick-up in summer travel.