The current trend suggests we could see prices soar beyond $100 per barrel soon.
In recent months, oil prices have surged. Let’s delve into the reasons:
- Most notably in my view, the US began replenishing its strategic reserves during this period, leveraging them to capture additional European markets.
- The summer marked a record global oil consumption: the transition to green energy, paradoxically, seems to be boosting the demand for ‘black gold’.
- The cartel agreement of OPEC+ means that the world’s leading producers continue to maintain a product deficit in the market, with no visible end in sight.
- Inflationary pressures are evident in the oil sector as well: this includes costs related to equipment, salaries, logistics, and infrastructure.
At the beginning of the year, I forecasted oil prices to reach $100 by year’s end. However, it seems this might occur sooner. We could witness these rates within weeks, and beyond that, the figures are unpredictable – perhaps even $120 or $150 per barrel, given the current trend.
Factors Potentially Limiting Oil Price Growth:
- A sharp market downturn.
- A global economic recession, which would slow down oil consumption.
- Agreements between the US and OPEC+.
While I believe the first two events are quite plausible within the next year, I’m skeptical about the third occurrence taking place in the upcoming 2-3 years.
The rationale is straightforward: why would countries like Saudi Arabia and Russia produce more for less profit when they could reduce infrastructure investments and earn more? Thus, trade wars persist.
Wishing everyone a successful day!