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Fitch: Oil price at $100 possible, but not in long run

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Oil may rise to $100 per barrel, but prices are unlikely to remain so high in the long run, Dmitry Marinchenko, senior director in Fitch Ratings’ Natural Resources & Commodities team, told RIA Novosti, Report informs.

The price of Brent crude oil has risen above $85 per barrel – for the first time in more than three years.

“The price increase may continue, $100 per barrel doesn’t seem such an incredible scenario, especially if the winter is cold and there is a physical shortage of gas in the market. But there is no fundamental reason for prices to remain so high in the long term,” said Marinchenko.

“The market is in deficit due to the cautious OPEC+ policy and the gradual recovery in demand – this is pushing prices up. Another factor is the explosive rise in gas prices, which this winter may lead to an increase in demand by about 1 million barrels per day due to an increase in the load of power plants operating on petroleum products,” he noted.

“As a result, OPEC+ is likely to increase production and try to bring the market back into balance,” the expert added. “In addition, the demand for oil is unlikely to grow as fast as before COVID, including due to a drop in demand for air travel and the partial transition of a large number of companies to remote work,” concluded Marinchenko.

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