Fresh fuel price hike looms as banks make high oil price predictions

A fresh hike in the pump price of fuel may be inevitable with banks and other renowned agencies predicting that the price of crude oil will rise to between $70 and $75 per barrel this year.

With the removal of petroleum subsidy by the Federal Government, an increase in the global price of Brent crude will result in a unilateral hike in the pump price of petrol by oil marketers, especially Independent Petroleum Marketers Association of Nigeria (IPMAN).

United States-based investment banks have released significantly higher oil price predictions through the year, citing rollout of COVID-19 vaccines, optimistic global economic data and non-members of the Organisation of Petroleum Exporting Countries (OPEC+) production discipline.

Goldman Sachs commodities team said global benchmark Brent oil will hit $70 a barrel in the second quarter (Q2) and $75 in the following three months.

Goldman said overall global demand would reach 100 million barrels a day (BPD) by late July 2021, rebounding to pre-pandemic levels while supply will still be depressed as major producers remain “highly inelastic” to the rising prices.

Morgan Stanley also raised its forecast for Brent prices. According to the U.S. bank, Brent crude prices will climb to $65 per barrel in Q2 and $70 in Q3 before it drops back to $65 in Q4.

The bank envisages that “signs of a much-improved market”, including prospects of a pick-up in demand, would support higher crude prices in the third quarter.

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