By Bozorgmehr Sharafedin

LONDON, (Reuters) – Oil prices rose 50% by 2021 and will rise further this year. Analysts predict that a shortage of capacity and low investment could cause crude oil to reach $100 a barrel.

Omicron coronavirus has driven COVID-19 case numbers far beyond the peak levels hit last year. However, analysts believe that oil prices will continue to rise despite the unwillingness of many governments and other countries to restore strict economic restrictions which ravaged the world economy in the aftermath of the pandemic.

Futures reached two-month peak levels of $84 and traded at a high above $84 on Wednesday. [O/R]

“Assuming China doesn’t suffer a sharp slowdown, that Omicron actually becomes Omi-gone, and with OPEC+’s ability to raise production clearly limited, I see no reason why Brent crude cannot move towards $100 in Q1, possibly sooner,” said Jeffrey Halley, senior market analyst at OANDA.

Organization of the Petroleum Exporting Countries, (OPEC), and their allies are slowly relaxing the output cuts that were implemented after 2020’s collapse of demand.

However, smaller producers are unable to increase supply. Others have been cautious about pumping too many oil in the event of new COVID-19 setbacks.

“We don’t want to see $100 a barrel. Bloomberg reported that Omani Oil Minister Mohammed Al Rumhi said Tuesday, “The world isn’t ready for this.”

Morgan Stanley According to the NYSE, Brent crude will be at $90 per barrel by the end of this year’s third quarter.

According to the bank, there is little safety margin in this market due to the possibility of low crude oil inventories and low spare capacities by 2022’s second half.

Standard Chartered (OTC) has meanwhile raised its 2022 Brent forecast of $8 to $75 a barrel and increased its 2023 Brent forecast $17 to $77.

J.P. Morgan Analysts also predict that oil prices will rise to $90 at the end the year.

According to the bank, current demand is an immediate tailwind because it has been largely invulnerable to coronavirus infection.