Oil prices predicted to reach $100 per barrel in May, highest since March, 2022

As Saudi Arabia extends supply cuts analysts have warned oil prices are poised to hit US$$100 a barrel by May, the highest since March 2022.

The price of Brent crude has already jumped by around 20 percent since the start of the year to more than US$91 per barrel.

This is according to The Telegraph report quoting analysts checked by Zambia Monitor on Sunday.

They stated that rising geopolitical tensions and an extension to the Opec cartel’s production curbs mean economists predict oil prices will surpass US$100 for the first time since summer 2022.

Bjarne Schieldrop, chief commodities analyst at SEB bank, said he expected the price of Brent crude, the global benchmark, to hit this threshold in either May or June.

“Towards the end of Q2, I think it’s natural to assume that we’ll see the price move towards the $100 mark,” Schieldrop said.

Saudi-led oil production cartel Opec in March announced it would extend supply cuts of 2.2 million barrels per day for a further three months.

He said Saudi Arabia opted to extend supply cuts for longer adding that it was a totally artificial price controlled by OPEC.

“The big question is what will OPEC do in Q3,” Schieldrop said.

OPEC was said to have implemented cuts as Mohammed bin Salman and Vladimir Putin seek to boost the oil price in search of increased revenues.

Callum Macpherson, head of commodities at Investec also believed oil prices will hit $100 by June if they continue to rise on the same trajectory since December.

However, analysts questioned how long oil prices remain high depending on escalating tensions in the Middle East.

In a client note last week, Daan Struyven, head of oil research at Goldman Sachs, also warned that extended Opec supply cuts “could send Brent above $100 for some time”.

Ole Hansen, analyst at Saxo Bank, said we could hit this benchmark “within days” if Iran and Israel engage in conflict and disrupt local oil supplies.

A major jump in oil prices will raise the risk of inflation staying higher for longer as it will drive up the cost of petrol and energy.

More on : business/2024/04/13/markets-brace-for-oil-hit-100-saudi-slashes-production

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