Oil Prices Heading Back to $150 a Barrel? Could it happen?

Oil prices could move “a lot higher” from current levels given the world’s deep reliance on fossil fuels and may hit $150, says Christopher Wood from Jefferies.

“In a world that really reopens — which is a big ‘if’ — the oil price can go significantly higher,” Wood, global head of equity strategy at the investment bank, told CNBC’s “Street Signs Asia” on Wednesday.

Is $150 out of the question? Can it really keep pushing higher? Right now we’re already at 7 year highs from when it crashed in 2014.

We all remember the days when oil prices were consistently in triple digits and it looked like we’d never see anything less. But somewhere along the way, things changed and oil prices took a nosedive, bottoming out at around $30 a barrel by early 2016.

But as Wood points out, that was largely before President Donald Trump took office and his America-first energy policy started to take hold. “Now you have got an administration which is much more supportive of the U.S. hydrocarbon industry than any previous administration has been for many years, if ever,” said Wood when Trump was leading our industry in a better direction, this was the start of what could of been a major uptick for our industry.

Wood believes that with continued growth in global demand for oil — especially from China and India — combined with production cuts and stability from OPEC and Russia, oil prices could be on their way back to the $150 a barrel price point in just a short period of time.

Could oil prices really keep rising?

Currently we see oil climbing to around $100 a barrel short term instead of the $150.

There are many factors that could drive prices back up to that point.

  • Inflation – Inflation is on the rise and will help oil prices increase.
  • Political Instability – Around the world, different nations seem to be at odds on many different fronts.
  • OPEC Agreement – OPEC members agreed to cut back and stabilize oil production which should help prices stabilize.
  • US Shale Production – Although US shale producers can ramp up quickly, they are also very quick to scale back down when prices get too high, adding more stability to the market.
  • Demand for Oil – Global demand continues to grow as economies like China and India continue to develop at a rapid pace.
  • Covid – Covid isn’t breaking out as bad as a lot of nations thought it would this time around, which is allowing for more of a demand of oil products.

All these factors taken together paint a rosy picture for increasing oil prices in the short term – even if $150 per barrel may be out of reach.. $100 is within out sights we believe.