Oil to breach $100 a barrel later this year- Goldman Sachs | Reuters

Oil to breach $100 a barrel later this year- Goldman Sachs | Reuters

Brent oil prices are primed to rise above $100 per barrel later this year, Goldman Sachs analysts said, adding oil market remains in a "surprisingly large deficit" as demand hit from the Omicron coronavirus variant is so far smaller than expected.

The hit to demand from Omicron will likely be offset by gas-to-oil substitution, increased supply disruptions, OPEC+ shortfalls, and disappointing production in Brazil and Norway, the analysts wrote in a note dated Monday.

Global oil demand is seen rising 3.5 million barrels per day (bpd) year-on-year in 2022, with fourth-quarter demand reaching 101.6 million bpd.

Goldman expects OECD inventories to fall to their lowest level since 2000 by summer, and OPEC+ spare capacity to decline to historically low levels, given the lack of drilling in core-OPEC and Russia struggling to ramp up production.

"We expect the increase in OPEC+ production to fall even further short of quotas in 2022, with an only 2.5 million bpd increase in production expected from the next nine hikes."