Closely followed economist Jim O’Neill thinks Brent crude oil might surge to $80 a barrel in the next year before falling back to roughly $60 by next November.
That would mark a 26 percent run-up from today’s price of about $63.50 a barrel. International benchmark Brent prices have already rallied about $20 a barrel, or more than 40 percent, from the year’s lows in June. Brent hit a nearly 2½-year high of $64.65 a barrel earlier this month.
Conventional wisdom holds that prices won’t budge much over the next year, says O’Neill, but the former chairman of Goldman Sachs Asset Management and creator of the “BRIC” acronym is not running with the herd.
“While oil prices could be about $60 per barrel in November 2018, my guess is that they will have risen to about $80 per barrel in the meantime,” O’Neill wrote in Barron’s this weekend.
O’Neill, now an economics professor at the University of Manchester, says the market is finally waking up to the fact that global economic growth is gaining momentum and likely expanding at 4 percent or higher. That means there will be more demand for oil.