The world’s top raw material trading companies have predicted a return to the $100 oil price era. This is because investment in developing new oil fields slowed before demand peaked. There is a reason why it takes time for eco-friendly energy to completely replace crude oil.
According to the Financial Times (FT) on the 15th (local time), leading raw material trading companies, ranging from Vitol to Glencore, Tripigura and Goldman Sachs, said $100 a barrel is truly possible. The outlook comes at a time when concerns have grown over inflation and soaring raw materials, the FT noted.
In terms of price, crude oil lags behind other raw materials due to a sharp drop in demand during the pandemic. But the outlook for the oil price rally in the coming years could be a new momentum for oil prices in the coming weeks, the FT predicted.
In fact, Brent crude, the benchmark for international oil prices, jumped nearly 2 percent on the 14th, well exceeding $73 a barrel. It has already hit a two-year high this week, marking the fourth straight day of gains.
Jeremy Bayer, chairman of Tripigura, said at the FT-hosted Global Summit that he was concerned about the lack of spending needed to supply new crude oil. This is because the global economy is not ready to jump into green energy and completely convert to electric vehicles, he explained.
“I really think there is a possibility that oil prices will rise to 100,” he said. “I am very worried about supply, not demand.” “The reserves have fallen from 15 years to 10 years, but they have plummeted from $400 billion five years ago to $100 billion,” he said.
Top Oil Traders’ Opinion
Glencore’s Alex Sanna trader also saw the possibility of $100 in oil prices. “With one or two events, the surge in oil prices will become a reality,” he said.
Vittol CEO Russell Hardy noted that OPEC Plus has enough idle productivity, citing the “possibility” of $100 in oil prices. In other words, OPEC+, which is cutting production due to pandemic reasons, can reschedule its gradual increase in response to soaring demand.
CEO Bitol expects crude oil demand to peak by 2030. The most severe supply and demand disruptions are expected in 2025-2030, he predicted, and global demand will not plunge before 2040 due to growth in developing countries.
Goldman Sachs’ head of raw materials, Jeff Cooley, said raw materials are seeing a new “supercycle” as government stimulus drives demand. This indicates that demand for crude oil increases as government spending on eco-friendly infrastructure projects increases. “If $2 trillion of capital is spent on the eco-friendly sector, the average daily demand for crude oil will be 200,000 barrels,” he said.
Oil prices have not exceeded $100 a barrel since 2014. The so-called “supercycle” ended with crude oil pouring into the U.S. shale revolution. Oil prices were $10 a barrel in the early 2000s, but rose well above $100 in 2008 thanks to China’s rapid growth. Over the next six years, oil prices have fluctuated, but on average they have risen from the $100 mark.