International Oil Prices Hit New High Again... Multiple Forecasts Predict "Surpassing $100" (Update)

Citigroup Also Says "Will Exceed $100 in Short Term"
WTI Closes at $91.48 per Barrel, Brent Oil at $94.43

International oil prices continue to rise due to production cuts by Saudi Arabia, with forecasts pouring in that prices will surpass $100 per barrel.

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Mike Wirth, CEO of Chevron, stated in an interview with Bloomberg TV on the 18th (local time) that oil prices are expected to reach $100 per barrel.

Amrita Sen, Chief Researcher at consulting firm Energy Aspects, also said, "This is a short-term situation," but added, "The current fundamentals are very strong. If asked whether oil prices can rise to $100 for a while, the answer is definitely yes."

On the day, international oil prices closed at $91.48 per barrel for West Texas Intermediate (WTI) and $94.43 per barrel for Brent crude. Both are the highest since November last year. Brent crude, the international oil benchmark, has risen more than 30% since hitting its lowest point in March this year. Oil prices surged due to a shortage in supply caused by production cuts from Saudi Arabia and Russia. Earlier, Saudi Arabia extended its policy of cutting production by 1 million barrels per day, which began in July, for three more months until the end of December. Russia also decided to extend its policy of cutting production by 300,000 barrels per day until the end of the year.

As oil prices surged, Saudi Arabia explained that the production cuts were not aimed at driving prices up. Abdulaziz bin Salman, Saudi Minister of Energy, defended the production cuts at an oil conference held in Canada that day, saying, "We are not trying to raise prices," and added, "Decisions must be based on data to make the right choices." He also emphasized that uncertainties remain large regarding demand, including the economies of the US, Europe, China, and central banks' interest rate decisions.

With oil prices rising to the mid-$90s per barrel, the breakthrough of $100 is becoming visible. Azerbaijani crude oil was already traded near $100 per barrel on the 15th, pushing up the upper range of oil price forecasts. Even Russian crude oil, which had been traded at discounted prices under the oil price cap, is reportedly fetching prices higher than the Asian benchmark.

Citigroup, which had previously taken a bearish stance on oil prices, also predicted on the same day that oil prices would surpass $100 in the short term. Ed Morse, a Citigroup analyst, forecasted, "Geopolitical and technical trading factors could push oil prices above $100 for a short period."

However, he added a caveat that oil prices are expected to decline in the long term. He said, "We are seeing a gradual easing of oil prices," and predicted that supply would increase in regions outside the Organization of the Petroleum Exporting Countries (OPEC) Plus members, such as the US and Brazil.

Concerns have been raised that the recent easing of inflation could rebound due to the sharp rise in oil prices, while some speculate that if oil prices rise for a prolonged period, it could actually limit demand.

Bjorn Sildrop, Senior Commodity Analyst at Swedish bank SEB AB, said, "The likelihood of Brent crude moving above $100 per barrel at maturity is very high," but also analyzed, "However, if Brent crude prices rise to $110?120 per barrel, demand for petroleum products is likely to suffer a greater blow. Such price levels seem excessive."