- Oil prices lurching back to $100/barrel is now a distinct possibility, says analysts.
- Prices are up so far this year due to vaccines roll out and demand in major economies, particularly the U.S. and China.
- Last year, oil demand saw a historic drop of 8.8 million barrels/day.
- Brent and WTI are now up between 40% and 45% this year.
- Consumers have other options as prices for electric vehicles come down, and oil prices go up.
- Forecasts of $100 barrel oil rest on assumptions of strained supply and a global economy.
U.S.-based economic boom, restricted supply—according to some analysts, oil prices lurching back to $100/barrel is now a distinct possibility, says an article published in Fortune.
Oil prices and vaccine roll out
Oil prices have certainly been on an incredible tear so far this year—jumping as vaccines are rolled out and demand mounts in major economies, particularly the U.S. and China.
High Brent and WTI
Both major contracts, Brent and WTI, are now sitting at highs last seen in late 2018, above $70/barrel, and are up between 40% and 45% this year, a clip so rapid it’s contributing to fears of rising inflation.
“You’re really only one or two events away from a material spike in oil prices,” Alex Sanna, the top oil trader at Glencore, said at a Financial Times event on Tuesday. Other traders, including from Goldman Sachs and the trading house Vitol, also said such a price spike was possible.
Resurging demand Vs Lack of investment
Medium term, several analysts warned that resurging demand paired with a lack of investment in new production by energy majors intent on cutting costs—and under pressure to shift capital away from fossil fuels and towards renewable energy—was likely to lead to higher prices.
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Source: Fortune