Rising oil costs are staying put by JPMorgan, with the bank assessing that Brent costs could hit $150/bl in 2023 as the OPEC+ cartel control supply and defend higher costs.

That implies the Biden administrations release of strategic petroleum reserves will littly affect the fundamental cost of oil, as was clarified in the initial price reaction in oil last week after the government flooded the market with 50 million barrels.

The primary driver behind oil costs is supply and demand. And keeping in mind that the Omicron COVID-19 variation put a dent into oil costs on Friday, with investors expecting that potential country lockdowns would diminish travel and accordingly lower demand for oil, JPMorgan saw that value move as an overreaction.

“We believe the market may overestimate the impacts of the recent emergence of the Omicron variant of COVID-19 on oil prices during the US holiday period,” JPMorgan said in a Monday note, inferring that there will be little to no slowdown in holiday travels even as the Omicron variant spreads.

With interest for oil liable to stay consistent, supply will stay the critical driver behind oil costs for a really long time in the future. Also, with OPEC+ “being firmly in the driver’s seat for oil prices,” JPMorgan figures Brent will hit $120/bl in 2022, and could even overshoot to $150/bl in 2023, addressing likely potential gain of as much as 100% from current levels.

“We believe OPEC+ will defend the oil price with paced volume growth to keep inventories low, markets in balance and reservoirs well managed,” JPMorgan explained.

Expanded supply from US-based oil producers could assist put with descending constraining on oil costs, however the US oil rig count is at about half what it was in 2019, and ventures once again into the area have been slow since the time oil costs momentarily turned negative in the midst of the beginning of the pandemic in 2020. That is a formula at rising oil costs, basically until US oil creation hits levels last seen before the pandemic.