- Oil demand could hit record highs later this year, according to Vitol CEO Russell Hardy.
- That could push prices back up to $100 a barrel, especially with crude inventories likely to tighten further.
Global demand for crude oil could hit record highs this year – potentially driving prices back up to $100 a barrel, according to Vitol's chief executive officer.
"Demand is expected to hit record levels in the second half of the year," Russell Hardy said in a Bloomberg interview on Monday. "The prospect of higher prices in the second half of the year, in the sort of $90-$100 range, is a real possibility," he added.
The view factors in a jump in demand due to the reopening of China's economy, as well as an expected drop in inventories over the coming months. Hardy said demand for most oil products is surpassing pre-pandemic levels, while gasoline is "fairly flat" and jet fuel lingers "in catch-up mode" as travel gradually picks up.
Brent crude, the international benchmark, has had a choppy start to the year, declining by about 5% so far in 2023 as high inflation, rising interest rates and recession fears all weighed on demand.
On Monday, Brent crude fell 1.4% to trade around $81.75 a barrel. The last time it traded within the $90-$100 range was in November.
Hardy's forecast has been echoed by other oil experts, including Saxo Bank's head of commodity strategy, Ole Hansen. "We do not claim to be smarter than one of the worlds biggest shippers and with the OPEC and IEA pointing toward the same trajectory - anything but a deepening economic slowdown or a peace deal in Ukraine would in our view support higher prices later in the year," Hansen told Insider.
"Not least supported by OPEC+ being in no hurry to add barrels into higher prices and Russia increasingly being challenged to maintain current production levels," he continued, and echoed Hardy's call that crude prices could reach $100 later this year.
OPEC+, or the Organization of the Petroleum Exporting Countries and its allies — including Russia, began cutting oil output last year in a bid to shore up declining prices. In December, the group said it would stick to its production cut target set last October, which is to slash output by 2 million barrels a day till the end of 2023.
Meanwhile, Russia has threatened to slash its oil production to retaliate against Western sanctions, standing to squeeze the market further, according to Hardy.