Oil prices are set to hit $100 a barrel by May, analysts warn, as Saudi Arabia extends its supply cuts.
Growing geopolitical tensions and an extension of the The OPEC cartel curbs production average economists predict that oil prices will exceed $100 for the first time since summer 2022.
Bjarne Schieldrop, chief commodities analyst at SEB bank, said he expects the price of Brent crude, the global benchmark, to reach that threshold in May or June.
Mr. Schieldrop said: “Towards the end of the second quarter, I think it is natural to assume that we will see the price move towards the $100 mark. »
The price of Brent crude has already jumped about 20% since the start of the year, reaching more than $91 per barrel.
That followed an announcement in March by the Saudi-led oil production cartel OPEC that it would extend supply cuts of 2.2 million barrels per day for another three months.
A rise in oil prices to $100 is likely to prove temporary unless Russia and Saudi Arabia choose to extend the supply cut, Schieldrop said: “This is a totally artificial price controlled by OPEC. The big question is what OPEC will do in the third quarter.
OPEC has implemented cuts as Mohammed bin Salman and Vladimir Putin seek to raise the price of oil in search of higher revenues.
Callum Macpherson, head of commodities at Investec, believes oil prices will hit $100 by June if they continue to rise on the same trajectory as in December.
However, the question of how long oil prices will remain high depends on escalation of tensions in the Middle Eastanalysts said.
In a client note last week, Daan Struyven, head of oil research at Goldman Sachs, warned that OPEC’s prolonged supply cuts “could push Brent above $100 for some time “.
Ole Hansen, an analyst at Saxo Bank, said we could reach that threshold “within days” if Iran and Israel engage in conflict and disrupt local oil supplies.
A significant rise in oil prices will increase the risk that inflation will remain high for longer, as it will drive up the cost of gasoline and energy.
Chris Hare, senior economist at HSBC, said a sustained 10% rise in oil prices typically adds between 0.1 and 0.2 percentage points to oil price rises. UK inflation.
Ashley Webb, a UK economist at Capital Economics, said this would pose a particular problem for the services sector, where the slowdown in inflation has been driven by declines in the most energy-intensive sectors, such as transport, hospitality and catering.
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