According to analysts at the Bank of America, the collapse of Venezuelan oil production and a potential breach of Iranian exports could push the price of Brent crude oil to 100 USD per barrel in 2019. The analysts said their target price for Brent was 90 USD for the second quarter of next year. However, they warned that the deteriorating conditions in Iran could raise prices to 100 USD, a level that was last reached in 2014.
Donald Trump’s decision to withdraw the US from Iran’s nuclear agreement has already raised Brent crude oil prices above 77 USD per barrel. The future of the commodity rose by more than 8% last month and by over 15% since the beginning of the year.
The investors are worried that renewed sanctions against Iran, a major oil producer, could lead to supply disruptions. On Tuesday, Trump promised to impose “strong” sanctions on the OPEC country, which is fourth in the world by crude oil reserves.
After the sanctions were mitigated within the framework of the nuclear agreement, Iran increased the oil production to about 3.8 million barrels per day. This is about 1 million barrels per day more than early 2016.
Another factor to reduce supply is the agreement between OPEC and other major producers, including Russia, to reduce the yield. It should expire at the end of 2018, but Bank of America analysts said OPEC and Russia would probably continue to work together to prevent price falls.
At the same time, according to analysts, the world economy is growing at a steady pace and supports the higher demand for oil. The increased demand helps to overcome the over-crowding that has been pursuing the markets.