Expectations are high that Brent crude prices will rise starting in May, following OPEC’s decision to prolong supply reductions. Analysts forecast that oil prices may reach $100 per barrel by May as Saudi Arabia continues to reduce supply.
Escalating geopolitical tensions and ongoing production limits by the OPEC cartel are expected to drive prices above $100, a peak not seen since the summer of 2022.
Bjarne Schieldrop, the chief commodities analyst at SEB bank, predicts that Brent crude, the international benchmark, could achieve this level in May or June. “By the latter half of the second quarter, it’s reasonable to expect prices approaching the $100 mark,” Schieldrop commented.
Since the beginning of the year, Brent crude prices have surged about 20% to over $91 per barrel. This increase followed a March announcement by the OPEC-led coalition, which agreed to extend their supply reduction of 2.2 million barrels per day for an additional three months.
Opec’s recent cuts come as Mohammed bin Salman and Vladimir Putin aim to elevate oil prices to boost revenues.
Callum Macpherson, head of commodities at Investec, posits that oil prices could reach $100 by June if they maintain their current upward trajectory since December.
The duration for which oil prices will remain elevated hinges on growing tensions in the Middle East, according to analysts.
Daan Struyven, head of oil research at Goldman Sachs, indicated in a client note last week that prolonged Opec supply restrictions could push Brent above $100 for an extended period.
Ole Hansen, an analyst at Saxo Bank, mentioned that we might reach this price level “within days” if a conflict between Iran and Israel disrupts oil supplies in the region. A significant increase in oil prices could heighten inflation risks, making petrol and energy more expensive.
Chris Hare, a senior economist at HSBC, stated that a consistent 10% increase in oil prices typically contributes between 0.1 and 0.2 percentage points to UK inflation.
