When Will Oil Hit $100 Per Barrel Again?

oil pumps1

Until the summer of 2014, crude oil prices topping $100 per barrel was a common occurrence in the markets. But the OPEC-driven war against foreign oil competitors like US shale flooded the market with oil, creating a crash that dropped prices down below $30 per barrel just a few years later.

Since then, there have been a slew of unprecedented changes in the oil industry. OPEC appears broken, as their plan ultimately ended up hurting them as much as anyone else. An agreement to curb production has helped lift oil prices out of the doldrums, but there’s still a lot of room to go before prices touch $100 per barrel again.

The oil resurgence

Oil prices are surging ahead for 2018, with crude oil jumping almost 19% year-to-date. Recently hitting north of the $70 mark, investors are beginning to wonder where the bullishness will end and if $100 prices are in our near future. Considering that OPEC production cuts are still being implemented, it stands to reason that prices could indeed continue to climb.

It’s not all about supply and demand for oil right now though. Another major catalyst that’s driving prices is the volatility markets have been experiencing lately. Uncertainty in equities and regular sell-offs have spooked investors who have been turning to other asset classes for stability. A persistently high US dollar and rising interest rates have also contributed to the issue.

One of the biggest wild cars in the oil industry is US shale. While currently healthy and strong, any drop in production for whatever reason could have far-reaching consequences. A slump in production could trigger a spike in oil prices next year that has the potential to hit above $100 per barrel.

According to the IEA, the US is set to supply much of global oil demand over the next five years, providing up to 60% of the increased production demand.  Oil production capacity is estimated to be as high as 107 million barrels per day by 2023, with most of that demand stemming from India and China.

Final thoughts

Oil at $100 per barrel is by no means a sure thing. There are still many things that need to happen in order to push prices up that far, and some analysts even believe it will never reach that price range again. One of the biggest question marks in the oil trade is the changes technology will bring to the table. Solar power has officially surpassed coal as far as being the cheaper and cleaner option. And vehicles are becoming more energy efficient, with electric vehicles taking up more and more market share. Regardless of what the future holds though, oil will still be a global staple for at least the next few decades.