Will the oil come back to $ 100?

Santiago Leal Singer, fixed income and exchange rate strategist at Banorte

After the collapse of 2014 when crude oil prices went from 120 to less than $ 30 per barrel, a significant recovery was recorded in particular in two factors: (1) OPEC pact and its allies led by Russia (19459006) OPEC + ); and (2) strong demand prospects for the moment of economic growth in the world.

Now Brent's prices are running very close to $ 80, before which it should be wondered if they will again reach the levels of $ 100.

The main dilemma is whether the deterioration caused by current supply disruptions could lead to even higher prices. It highlights the decline of the Venezuelan platform and the impact of the re-imposition of United States sanctions to Iran with at least three other major fronts remaining for the moment: ] Iraq Libya and Nigeria .

In this context, the OPEC + announced two weeks ago an increase in its production, which means in fact a moderation of exceeding the limit in order to prevent the potential for price increases. to erode international consumption.

A collective goal of one million barrels a day has been pointed out, but in actual terms the flow will be lower due to the lack of capacity to add barrels in most countries of the pact. More specifically, only Saudi Arabia Russia and some Persian Gulf countries have the opportunity to increase their production, the largest reserve being concentrated in the first two.

Meanwhile, the United States has been particularly influential in getting its Saudi ally to intervene more aggressively, suggesting an increase of two million barrels a day to moderate the escalating price that has led to a increase in the country's gasoline, which runs through the driving season before the mid-term elections on Nov. 6.

It should be remembered that the United States possesses the Strategic Petroleum Reserve an element that could become more relevant.

Given this context, and highlighting US intervention, much higher prices seem unlikely in the short term. However, the magnitude of the existing supply disruptions could generate a scenario where available supply capacity would be exceeded unless there is a further change in the policy of the different forces intervening on the supply side. this market.

* The author is a fixed income and exchange rate strategist of Grupo Financiero Banorte. The opinions expressed in this column do not necessarily coincide with those of Grupo Financiero Banorte, which is the sole responsibility of the author