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Oil prices are set to continue rising in 2022, having already increased by 50% in 2021. Many have predicted that the cost of Brent crude, the global oil benchmark, could reach $90 – $100 a barrel.
Predictions come after Brent crude reached almost $85 a barrel on Wednesday, bringing the price of oil to a two-month high.
The rise of oil prices has, in part, been encouraged by a cut in oil production first ordered by The Organisation of the Petroleum Exporting Countries (OPEC) after demand collapsed during the height of the pandemic in 2020. OPEC had cut supply by 9.7 million barrels per day.
However, demand for oil has returned to pre-pandemic levels at roughly 99 million barrels per day. OPEC has been slow to move and have lacked the capacity to meet the required output. The Energy Information Administration (EIA) has lowered OPEC’s capacity estimates for 2022 by 800,000 barrels per day.
Economists warn that this strong demand for oil coupled with limited capacity and supply threatens to increase the price of oil to the highest levels since 2014. Omani Oil Minister Mohammed Al Ruhmi has commented that “The world is not ready” to see the price of oil reach $100 a barrel in a stark warning to the rest of the world.