Oil at $100 a barrel was considered inevitable not too long ago, as Wall Street strategists predicted a commodities supercycle. And it still remains in play, even with the omicron variant raging and Covid cases rising. 

The market saw this just a few years ago. In 2011, Brent climbed as high as $126 per barrel and stayed above $100 for the next three years as the Arab Spring cascaded through Northern Africa, impacting oil-producing nations like Libya, an OPEC+ member. Demand slowed in 2014 as China’s domestic growth decelerated and the U.S. shale boom quickly added supply. The result was a more than 70% decline in oil prices that lasted until 2016, when the market found a new equilibrium. Two years of global growth followed, until the trade war between the U.S. and China began in the summer of 2018.

That scenario is similar to today. The global economy is broadly rebounding from last year’s Covid-driven lockdowns. Crude hitting $100 oil has largely been considered inevitable given the hesitance of OPEC+ to unleash supply on the market and battered American producers’ desire to be more fiscally responsible with less drilling and less borrowing. Looking ahead, there’s demand on the horizon as even struggling airlines predict travel will return to 2019 levels in 2023. A global coordinated reserve release would be helpful in pushing prices at the pump lower for American consumers, but is widely considered to be a short-term solution. 

Rising oil prices due to pent-up demand has been a key driver of inflation. But it works the other way too. Inflation has an effect on the value of the dollar, the currency in which oil contracts are priced. As the greenback rises, thanks to climbing yields and an expectation of three rate hikes in 2022, $100 oil could come faster than expected.