A senior Bank of America official says one commodity is poised to skyrocket in price as the war against Iran continues.
Francisco Blanch, head of commodities and derivatives research at Bank of America, say that if the war continues, things could get “very, very complicated for oil prices.”
According to Blanch, in such a scenario, oil could explode to a price of as much as $200 per barrel.
“…if we’re still in the same place in May, looking at the third quarter, I already said we could see spikes to $160 per barrel.
If things continue like this, we could see Brent break $200 a barrel.”
Brent Crude is trading at $108 at the time of writing.
Blanch goes on to say that countries around the world will be motivated to increase their oil reserves due to the oil supply shock resulting from Iran’s blocking of the Strait of Hormuz, through which a fifth of the world’s oil supplies pass. According to Blanch, this could be bullish for prices in the long term.
“I think the world is going to change more fundamentally the way we think about resources. Remember, Japan pushed for just-in-time in the 1990s [inventory management strategy].
And in the 2020s [it] China’s just-in-case strategy of inventory accumulation has been. So they have built up huge oil reserves… …I think this trend will only accelerate once the war is over. And I think sooner or later this will provide support to long-term commodity prices.”
According to Blanch, the oil supply and price shock resulting from the war against Iran could trigger an economic recession if left unresolved.
“We need to see this war come to an end, because if we don’t, I think the risks of a recession will increase by the week as we approach April…”
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