As travel demand rebounds globally, crude oil price may surge to $100 a barrel next year.
The Bank of America Corporation predicted the strongest call yet among major forecasters for a return to triple digits.
Global oil consumption will continue to outstrip supply in 2022 as the economic recovery from the pandemic boosts fuel consumption, while investment in new production is crimped by environmental concerns, the bank said in a report.
“There is plenty of pent-up oil demand ready to be unleashed,” the bank’s New York-based head of commodities research, Francisco Blanch has predicted.
Brent futures traded $75 a barrel last week.
While other market-watchers, from trading house Trafigura Group to Goldman Sachs Group Inc., have already said that oil could reach $100 again in the right conditions, the prediction from Bank of America was the firmest to date.
If crude does return to triple digits, it will be the first time since 2014, before a flood of North American shale oil sent the market into a slump from which it has never fully recovered, Bloomberg reported.
The increasingly bullish outlook for oil is adding to pressure on the OPEC+ coalition led by Saudi Arabia and Russia, which meets this week to consider reviving some more of the production it cut during the pandemic.
While Riyadh has signalled it prefers to move cautiously, an ever-tighter world market could compel the alliance to open the taps a little. Prices have been stoked this month as fellow OPEC member Iran failed to clinch an agreement to relieve U.S. sanctions on its petroleum exports.
According to Bank of America, the immediate prospects for the OPEC+ alliance are bright, adding that oil consumption will be bolstered next year as mass transit struggles to keep pace with extra travel demand, prompting passengers to make greater use of private cars.
