Christyan Malek, lead for EMEA energy equity research at JPMorgan, predicts that crude oil prices could soar to $150 per barrel by 2026, driven by a looming energy supercycle and "institutional and policy-led pressures" hastening the shift from hydrocarbons.
Malek's prediction comes as oil prices have surged past the $90 per barrel mark in the wake of OPEC's decision to cut production. The year 2023 has also seen a significant shift towards de-dollarization, as well as energy collaborations among BRICS countries.
Just a week ago, Russia's Tass News reported that Gazprom Neft, a top Russian oil distributor, has moved entirely away from using U.S. dollars and euros. In a recent interview with Bloomberg, Malek projected that oil might touch the $150 per barrel threshold in a mere three years.
"Put your seatbelts on. It's going to be a very volatile supercycle," Malek told Bloomberg.
Malek's forecast is supported by a number of factors, including tight supply and demand balances, elevated corporate breakevens, and OPEC's falling spare capacity. In his note to investors, Malek wrote that he sees a shortfall of 1.1 million barrels a day in 2025, escalating to 7.1 million by 2030.
An International Energy Agency (IEA) report from August also signals an upward trajectory for oil prices. The report found that global oil demand is expected to rise by 2.1 million barrels per day in 2023, to 101.7 million barrels per day. The IEA also warned that the world is facing a "tight oil market" in the second half of 2023, as non-OPEC supply growth is expected to slow.
The rise in oil prices is already having a knock-on effect on the global economy. U.S. Bureau of Labor Statistics data from August showed a 0.6% increase in inflation, largely tied to the rise in energy costs. Last year, an analyst from Goldman Sachs anticipated Brent reaching $110 per barrel by mid-2023, a sentiment echoed by Morgan Stanley's commodity experts.
If Malek's prediction is correct, it would have a significant impact on the global economy. Oil is a key input in a wide range of goods and services, and higher oil prices would lead to higher prices for consumers and businesses alike.
It is important to note that Malek's prediction is just that: a prediction. Oil prices are notoriously difficult to predict, and a number of factors could derail Malek's forecast. However, the factors that Malek points to are real and could have a significant impact on oil prices in the coming years.
