Experts are predicting that the price of crude oil could reach the coveted $100 per barrel mark as prices continue to surge. The demand for diesel fuel is rising, causing price premiums for physical oil barrels to skyrocket across the globe. Refiners are scrambling to meet this growing demand, resulting in higher prices for oil supplies from various regions, including the Middle East, Azerbaijan, and Russia.
Despite crude oil currently hovering in the mid-$90s range, many investment funds remain underinvested in the oil sector. Chevron Corp. CEO Mike Wirth expressed confidence in oil reaching $100 a barrel, adding weight to the bullish outlook. Consumption of oil has reached record highs, and production cuts in Saudi Arabia and Russia have tightened supplies, leading refiners to snap up barrels to meet fuel production needs.
Amrita Sen, head of research at Energy Aspects, acknowledges the potential for oil to briefly touch the $100 milestone, despite not predicting a sustained average above that level. Examples of the rising prices can be seen in the physical markets, with Azerbaijani Azeri Light crude trading near $100 a barrel due to high profits in converting crude to diesel. Similarly, Russian barrels, once trading at a discount, are now commanding premiums in Asia.
Even bearish market analysts are conceding the possibility of a $100 barrel, especially considering the ongoing political risks in oil-producing countries like Libya and Nigeria. However, they expect supply growth from countries outside the OPEC+ alliance, such as the U.S., Guyana, and Brazil, to ease the tight market conditions.
The rising oil prices are now causing concern about the impact on consuming nations. The Reserve Bank of India has warned that crude oil above $90 a barrel poses a new risk to global financial stability. While Brent Crude hasn’t yet hit $100 this year, refined fuel prices, like gasoline and diesel, have remained above that level for months.
Overall, experts believe that the fundamentals are strong, and the potential for oil to reach $100 a barrel is becoming more likely as demand continues to increase and supply tightens.