The price of Brent crude will keep rising and hit US$100 per barrel later this year according to the latest prediction from US bank Goldman Sachs (NYSE:GS).
Crude prices hit a seven-year high today of just under US$88, but the upward charge is not going to reverse anytime soon argue analysts at the bank.
Fears that omicron might see demand slow have not materialised, it said, with the market remaining in a "surprisingly large deficit".
Supply problems are adding to the upward pressure, said Goldman, with oil being used as a substitute for gas alongside disruption to production from OPEC+ and other major producers such as Brazil and Norway.
The bank predicts oil stocks will drop to their lowest level since 2000 by the middle of the year, as exploration cutbacks in OPEC+ especially restrict its capacity to increase output.
Demand meanwhile is tipped to rise by 3.5mln per day and reach 101.6mln barrels daily by the fourth quarter of 2022.
"We expect the increase in OPEC+ production to fall even further short of quotas in 2022, with an only 2.5 million bpd increase in production expected from the next nine hikes.
"We are not forecasting Brent trading above $100 per barrel on an argument of running out of oil as the shale resources is still large and elastic," the bank said.
Higher crude prices are however generating a substantial cash windfall for the producers.
Anglo-Dutch giant Shell has said previously that every US$10 rise in the Brent oil price generates an extra US$3bn of earnings (US$4bn of cashflow) in its upstream business and an extra US$1.1bn at its integrated gas arm.
Brent Crude was trading at around US$46 per barrel a little over a year ago.
Shares in Shell rose by 1.4% today to 1,867p or close to a two-year high.