Oil prices could hit $100 a barrel over the next year, as robust economic recovery in the aftermath of the coronavirus pandemic, according to analysts. In the next 12 to 18 months, global economic recovery would be fast paced, and this could spur prices beyond the sensitive $100 mark.
According to Trafigura's global chief economist Saad Rahim, crude oil could hit triple digits soon under the right conditions.
Market Hungry for Oil
"The market is hungry for oil ... ,Rahim told Bloomberg Television.
The report comes a day after a top analyst said in an article that crude could hit $130 per barrel in the next few years. However, there will be wild price swings during the next few years.
"You could see spikes to even higher than $100 a barrel, even $130, and you could also see it go down to $35 a barrel for periods of time going forward ... The question is what happens first. Peak demand or peak investment?" ," William Reed II, chief executive of Castleton Commodities International, said, according to Reuters.
Benchmark Crude Tops $75 a Barrel
These predictions come at a time when the price of benchmark crude topped $75 a barrel for the first time in two years. The resurgence in crude demand was caused by the re-emergence of big economies from the pandemic stupor. The demand for gasoline, diesel as well as jet fuel is inching up.
"Eventually you are going to be in a situation where demand has not only recovered but is stronger than it was, and you don't have that capacity you need," Rahim told Bloomberg.
According to him crude oil prices could hit $100 by the next year but the surge will go beyond that level in the following 18 months.
The analyst says that along with increasing demand, "structural underinvestment" over the last couple of years will also spur crude prices.
The 'structural underinvestment' was caused by the grim outlook in the immediate aftermath of the coronavirus pandemic that ravaged in the beginning of the last year. Energy energy authorities in key production and trading hubs had calculated that demand growth had come to a complete stop and there would be increasing shift away from fossil fuels.
However, as Oilprice.com notes in an article, the same agencies including International Energy Agency have reversed stand now.