Oil to remain elevated in the medium-term, keeping inflation above 3% – JP Morgan
|Oil prices have risen substantially this year; WTI crude is up 60.1% to $77.43/bbl and Brent has risen 58.1% to $80.98/bbl. Strategists at JP Morgan expect price pressures will persist and lead to higher inflation.
Brent prices to average $70-$80 in 4Q21
“Our base case remains that Brent prices average $70-$80 in 4Q21 as global inventories are restocked and global consumption continues to recover. We acknowledge that persistent supply chain constraints present some upside risk to this outlook. With that said, it should be emphasized the OPEC+ has plenty of capacity to ramp up production and could do so if prices continue to move higher.”
“Going forward, its likely oil prices will remain elevated over the medium-term, keeping headline inflation above 3% through mid-2022. However, supply constraints should ease and inventories should gradually be rebuilt, allowing for inflationary pressures driven by higher oil prices to ease into 2023.”
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