Muscat – The Brent crude benchmark price is likely to hit US$120 per barrel by the end of June 2022, Bank of America (BofA) said in a research note this week, according to Bloomberg.
The catalyst for BofA’s increased price forecast is the current global energy crisis that has seen prices for crude oil, coal, natural gas, and LNG skyrocket as the market tightens.
Just a month ago, BofA had forecast that oil could reach US$100 over the next six months – and that was if we had a winter that was colder than usual. At the time, this was expected to be the most important driver of the global energy markets.
BofA now expects that the oil demand recovery will continue to outpace supply over the next year and a half, resulting in dwindling inventories that set the stage for higher oil prices. BofA sees rebounding diesel, jet fuel, and petrol – along with refining capacity restraints – accelerating this price rally into next year.
‘Oil prices have recently risen above US$80, led by gas-to-oil substitution and an increase in air travel. Pent-up demand for oil was the main reason we laid out a US$100 target for Brent in 2022 back in June. Yet we now believe that the run-up in global gas and coal prices has turbocharged the Brent and WTI price recovery,’ BofA wrote in its note.