The Organization of the Petroleum Exporting Countries (OPEC) and its allies led by Russia are under growing political pressure to loosen the taps and pump more crude to cool red-hot prices as Bank of America (BofA) is now predicting that Brent crude oil will race to $120 a barrel by June 2022. That’s 45 percent higher than current levels.
OPEC+ production will be re-evaluated today, although it is widely expected that the group will stick to the current previously agreed plan of incremental increases of 400,000 barrels per day (bpd) on a monthly basis.
“I’m not surprised that OPEC is holding the line on production,” Samantha Gross, director of the Energy Security and Climate Initiative at the Brookings Institution, a Washington, DC-based think-tank, told Al Jazeera.
“Producers were hurting during the pandemic fall in demand and I think they want to make up for some of it as demand recovers.”
Analysts say the market is expecting OPEC+ not to yield to external pressure.
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“The market is pricing in optimism that OPEC+ sticks to its plan to keep a cautious approach to releasing supply back on the market,” Louise Dickson, senior analyst at Rystad Energy, a Norway-based research firm, told Al Jazeera.
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 $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 feels even more so now that the global 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.
In September, BofA pointed to the grim situation in the European energy markets, which have seen depleting inventories that have triggered vigorous price volatility as a sign of what’s to come.
