Six reasons for rise in oil prices to $100 per barrel

Bank of America forecasts Brent crude to rise in price to $75 in 2022, but analysts say oil prices may grow to $100 due to certain factors, Report informs referring to Prime agency.

In the report, the bank predicts the average cost of a barrel of Brent crude in 2021 at $68, in 2022 - at $75. At the same time, the forecast, released in June 2020, stated that this year the average Brent price would be $60 per barrel. The average oil price for 2021 is $64 per barrel, which is in line with the 20-year average.

However, a combination of factors could push oil towards $100 a barrel next year, mainly due to three key demand drivers and three key supply factors, according to the report.

On the demand side, mobility can increase significantly following mass vaccination. Secondly, the bank expects the trend of remote work to continue. Thirdly, people will continue to prefer private cars, which will also increase fuel consumption in the future.

On the supply side, analysts expect pressure from the US government worldwide to reduce capital investment in oil projects to meet the goals of the Paris Treaty. Second, investors are increasingly opposed to spending in the energy sector for financial and environmental reasons. Finally, there is increasing legal pressure from the judiciary to limit carbon dioxide emissions.

If OPEC+ agrees to extend the rather strict policy of limiting production in 2021 and the first half of 2022 to the second half of 2022, the price of Brent crude may reach three-digit figures next year, the bank concluded. However, following the response from US shale producers, the price will drop to $65 per barrel by 2023.

Among the downside risks, Bank of America notes the possible entry of Iranian oil into the market, the deterioration in the discipline of the OPEC+ deal, coronavirus mutation and a slowdown in vaccination rates, tightening of monetary policy, and the precarious position of the Democratic majority in the US Congress.