VINACHEM

Oil prices are poised to hit $100 a barrel by May, analysts have warned, as Saudi Arabia extends supply cuts.

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

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

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

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

This followed an announcement from the Saudi-led oil production cartel Opec in March, which said it would extend supply cuts of 2.2 million barrels per day for a further three months.
A jump in oil prices to $100 should prove temporary unless Russia and Saudi Arabia opt to extend supply cuts for longer, Mr Schieldrop said: “It’s a totally artificial price controlled by Opec. The big question is what will Opec do in Q3.”

Opec has 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, believes oil prices will hit $100 by June if they continue to rise on the same trajectory since December.

However, the question of how long oil prices remain high depends on escalating tensions in the Middle East, analysts said.

In a client note last week, Daan Struyven, head of oil research at Goldman Sachs, 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.

Chris Hare, senior economist at HSBC, said a sustained 10pc rise in oil prices typically adds between 0.1 and 0.2 percentage points to UK inflation.

Ashley Webb, UK economist at Capital Economics, said this would be a particular problem for the services sector, where cooling inflation has been driven by falls in the most energy-intensive sectors, such as transport, hotels and restaurants.  – Source: MSN –