However, the outlook for the next two years is less encouraging. RHB Research expects the price to drop to US$85 in 2023 and US$75 in 2024.

Analysts said the continuous tight supply situation caused by the Russia-Ukraine conflict and a decision by the Organisation of Petroleum Exporting Countries (Opec) to reduce production by 100,000 barrels per day (bpd) this year, against their earlier pledge to raise it by 275,000 (bpd) would keep prices up for now.

RHB has even revised its forecast for Brent crude oil price to US$108 per barrel from US$104 this year but is keeping its projections from 2023 and 2024.

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For the medium term, it said, oil prices would likely average US$110 per barrel in the third quarter of this year (Q3 2022) and moderate to US$105 in Q4 2022.

Inter-Pacific Securities head of research Victor Wan said the Brent crude price seems to be holding at US$110 per barrel.

“Given that not much has changed, it will hold above US$100 due to the tight supply as there is rising demand around the world,” he told FMT Business.

Wan attributed the current supply condition to the European Union’s refusal to buy oil from Russia. A sanction on Russia has been put in place in response to its invasion of Ukraine.

With regards to the rising interest rate environment, Wan believes the demand would decline after the seasonal uptick led by increased travel activity in the summer months.

“In the fall, the demand for oil is expected to drop to reflect the rise in interest rates,” he said.

For the upcoming US Federal Reserve’s Federal Open Market Committee (FOMC) meeting in July, economists anticipate another increase of 75 basis points, a repeat of the May meeting. Fed officials have projected the key interest rate to settle at 3.4% at the end of the year.

Wan estimated that the Brent crude price will hover above US$100 until end-2022 unless there are major changes in the supply and demand dynamics such as the resolution of the Ukraine-Russia conflict or Opec decides to increase production.

Rakuten Trade Sdn Bhd vice-president of equity research Thong Pak Leng said the Russia-Ukraine conflict would be a key determining factor in the movement of oil price for the second half of the year.

“As long as the war rages on the price of oil will remain elevated. Without any resolution to the conflict, the oil price is expected to remain above the US$100 per barrel threshold,” he said.

On the subject of rising interest rates, Thong said that while such rate hikes would likely translate to lower growth, it might not necessarily mean there will be lower demand for oil.

Brent crude futures settled at US$112.88 per barrel on Monday, a 12 cent or 0.11% increase from the previous close of US$111.75 on Sunday.