- Oil prices could briefly spike to $100 per barrel in 2022 as demand surges, Bank of America says.
- On the demand front, pent-up desires to move out and about after an 18 month lockdown will push prices higher.
- Brent crude hasn't hit $100 since 2014. On Tuesday it jumped above $75 a barrel for the first time in two years.
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Oil prices could briefly spike to $100 per barrel in 2022 as demand surges, Bank of America says.
The firm's Francisco Blanch said that three demand and three supply factors will push Brent to a "Benjamin" level. Brent crude hasn't hit $100 since 2014.
On the demand front, people's pent-up desire to move out and about after an 18 month lockdown will push prices higher, as well as a a continued use of private cars as commuters are slow to return to mass transit. He also said that more remote work could result in more miles driven, "as work-from-home turns into work-from-car."
On the supply side, Blanch expects government policy pressure in the US and around the world to curb capital expenditures over the coming quarters to meeting goals outlined in the Paris Agreement and to limit CO2 emissions. Also, investors have become more vocal about ESG and that could curb supply.
"In short, demand is poised to bounce back and supply may not fully keep up, placing OPEC in control of the oil market in 2022," Blanch said.
As a result, BofA increased its Brent crude oil price forecast for 2021 from $63 per barrel to $68 per barrel and upped its 2022 crude oil projections to $75 per barrel from $60 per barrel.
" Still, non-OPEC oil supply elasticity has not totally vanished. US shale will likely respond to these higher prices, suggesting that Brent will roll back down to average $65/bbl by 2023," he added.
On Tuesday Brent crude jumped above $75 a barrel for the first time in two years. It now sits at $74.90.