Bank of America has predicted that the price of oil will surge to $95 per barrel by June. Francisco Blanch, the director of raw materials and derivatives at the bank, attributes this increase to dwindling reserves and escalating geopolitical tensions.
Additionally, production cuts by OPEC+ could impact the interest rate reduction strategies of the US Federal Reserve and the European Central Bank.
According to a recent Bank of America Research report, released yesterday, commodity prices hit a two-year low in early 2024, alleviating inflation concerns and benefiting consumers.
However, the report also notes that OPEC+ production cuts, geopolitical tensions, and economic growth have reversed this trend, signaling more constrained negotiations in the coming months.
Blanch emphasized that the current situation suggests a looming cyclical recovery, coinciding with potential interest rate reductions by the Fed and ECB, which could further limit central banks’ capacity to provide stimulus.
In response to these factors, Bank of America has revised its average price forecasts, projecting Brent crude, the EU reference, to reach $86 per barrel by the end of the year, and West Texas Intermediate (WTI), the US reference, to hit $81 per barrel.
Based on Bank of America’s projections, crude oil prices could surge to $95 per barrel starting in June.
