The 2 factors that could send oil prices 23% higher over the next year, according to Bank of America

• Global crude prices have fallen sharply but they could jump 23% over the next 12 to 36 monhts, according to Bank of America.
• The deep inversion of the 2- and 10-year Treasury notes signals worse-than-expected recessions worldwide, which poses demand risks to oil.

Bank of America says oil prices could surge 23% from current levels and hit $90 a barrel depending on two factors: a Federal Reserve policy pivot and China's reopening plans.

Brent crude, the international benchmark, traded Monday at about $73 a barrel. It climbed to over $120 in June, but has fallen recently as the global economic outlook falters.

Fears of weaker growth have dragged oil lower, as well as other commodity markets, but a Fed pivot could bring demand back and send oil prices higher, Bank of America strategists wrote in a Monday note.

The deep inversion of the 2-year and 10-year Treasury notes, for example, have weighed on near-dated oil contracts, as they are recessionary signals.

"With the interest rate curve now fully inverted, Brent may need a Fed pivot to turn the corner," the strategists said, adding that US fiscal policy has remained relatively relaxed.

The second key factor that could push Brent crude higher is China's continued reopening efforts, analysts said. Demand risks from a delayed China reopening could keep oil prices muted, but if Beijing accelerates the process it would present upside for Brent crude.

"[T]he spot price of crude oil has come off sharply but longer dated prices have been more resilient, pointing to a much more constructive market over the next 12 to 36 months as China reopens and the US and Europe come out of recession," Bank of America said.

Still, China, the world's second largest economy, could reopen in fits and starts, according to BofA.

Thanks to Beijing's extensive lockdowns so far, natural immunity in China could be lower and hospital capacities may be strained, which ultimately could lead to a slower rebound in oil demand.

What's more, aggregate open interest in oil markets has fallen off to a point not seen since 2015, BofA said, which poses another headwind for oil prices from the investor side.

"In sum, Brent may need a Fed pivot and a successful China reopening to turn the corner, but prices could bounce up quickly above $90/bbl if these two conditions are met, especially now that spec positioning has turned neutral," the strategists maintained.

Meanwhile, with Western nations agreeing to a generous Russian oil price cap of $60 a barrel, the impact on crude prices has been minimal, as Moscow hasn't been forced to slash supplies, the bank's strategists noted. Russian supplies continue to flow into global markets, with almost 90% of the shunned barrels diverting to Asia away from Europe.