(Bloomberg) -- Oil could top $100 a barrel in the next 12 to 18 months as the recovery from the pandemic drives a rebound in demand, according to Trafigura Group.
“The market is hungry for oil,” Saad Rahim, Trafigura’s global chief economist, said Tuesday in an interview with Bloomberg Television. The trading house joins a chorus of market-watchers predicting that crude could reach triple digits again in the right conditions.
Benchmark Brent has surged above $75 a barrel for the first time in two years as economies emerge from Covid-19 restrictions, pushing up demand for gasoline, diesel and even jet fuel. The pick-up in consumption -- now driven by the U.S. and Europe -- and the “structural underinvestment” in new production will underpin a further rise in prices, Rahim said.
“Eventually you are going to be in a situation where demand has not only recovered but is stronger than it was, and you don’t have that capacity you need,” he said. Prices could hit $100 as soon as next year and are likely to exceed that level within 18 months -- if the conditions are right -- with the increase happening “gradually and then suddenly,” Rahim said.
Trafigura is the world’s second-largest independent oil trader, handling more than 6 million barrels of crude and petroleum products a day. The Singapore-based company has thrived during the pandemic, posting record half-year profit of $2.1 billion as it seized opportunities to cash in on volatile swings in commodity prices.
Bank of America Corp. also forecast this week that oil could surge to $100 next year, while Goldman Sachs Group Inc. said it doesn’t rule out a jump to that level.
--With assistance from Manus Cranny.
© 2021 Bloomberg L.P.
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