- OPEC+’s surprise decision to squeeze supply in time for the driving season could boost oil prices, according to an energy analyst.
- The new normal for crude oil prices could climb to $100 a barrel, Paul Sankey told CNBC.
- Sankey Research’s president also warned the supply side of the oil market isn’t looking great.
The surprise move last weekend by the Organization of Petroleum Exporting Countries and its allies to slash oil output will squeeze supply in time for the summer driving season – which will likely boost oil prices toward $100 a barrel, an energy analyst said.
“The key thing here is Saudi wants higher prices, and they’ve basically said $95 is what they aspire to. They haven’t specifically said that, but that’s what we’re kind of led to understand. So I think that would be the next target, definitely,” analyst Paul Sankey told CNBC on Monday, referring to the cartel’s de facto leader.
Brent crude prices, the European benchmark, has rallied more than 20% from a 15-month low reached in March, and traded near $85 per barrel at last check on Wednesday.
“You have the natural rise in demand here because of seasonality. So you go into driving season in the US, you also have a lot of refineries to come back online. They’re going to suck up more crude. So the crude market will be tightening naturally, seasonally,” he said.
He also warned the supply side of the oil market isn’t looking great.
“We really only have growth in Guyana outside of OPEC+ and almost nothing else to speak of. So structurally, the market to me looks like it’ll be a $100 market in the future simply by lack of supply growth,” he said.