Analysts say that the Fed is not afraid of reducing its size, and oil prices are expected to rise to $150 after the shadow of the epidemic recedes?

On Wednesday (Dec.
1), Jefferies' analyst Christopher Wood said that given the world's heavy dependence on fossil fuels, oil prices are likely to "rise significantly"
from current levels.
Last year, fossil fuels met 84% of the world's energy needs
.
Although "political attacks" have removed the incentive to invest in fossil fuels in recent years, the importance of fossil fuels remains
.
Although the Fed's tightening policy may weigh on the oil market, Wood believes that the Fed will eventually abandon tightening and turn to financial repression
.

Analysts expect oil prices to rise to $150 if the global economy fully opens

Christopher Wood, head of global equity strategy at investment bank Jefferies, said oil prices could rise sharply from current levels, possibly reaching $
150 a barrel, given the world's heavy reliance on fossil fuels.

"If the global economy fully reopens, oil prices could rise significantly, but there is still a lot of uncertainty," Wood said, noting that "when oil prices rise above $80, many Asian countries are still in lockdown
.
" If the world fully reopens, the price of oil could rise to $150 because supply constraints are very severe
.
”

The strategist said that "political attacks" on fossil fuels in recent years have removed the incentive to invest in the industry, yet the importance of fossil fuels remains
.
He noted that 84 percent of global energy needs were met by fossil fuels last year
.
"For me, the problem is not oil prices, it's the pandemic
," Wood said.
After reopening, oil prices will be higher because no one is investing in new oil projects, but the world is still consuming fossil fuels
.
As a result, oil prices could move sharply higher, which would certainly exacerbate inflation fears
.
"

The World Health Organization's warning about the Omicron strain last week triggered a plunge in global markets, with oil prices experiencing the biggest drop in 2021 on Friday
.
Since then, oil prices have been caught in wild swings as investors look to figure out the impact
of this newly discovered variant on the economy.
"The only thing that really drove down oil prices was new lockdowns in the West, which is why when we saw the news about the new variant, oil prices pulled
back," Wood said.

The epidemic has caused volatility in the oil market, and the Fed's tightening policy may not be sustainable

The crude oil market fell
sharply on Tuesday after Moderna CEO Stephane Bancel said he expected the vaccine to be less effective against the new strain.
Bansell also said Monday that it could take months to develop and ship a vaccine
specifically against the Omicron variant.

Looking ahead, Wood predicts that structurally inflation could eventually be higher than pre-pandemic levels
.
He said that once there is a negative change in the epidemic, even if vaccination efforts are increased, the oil market may have more volatility
in the future.
Expectations of higher structural inflation in the future mean that markets will be at the mercy of tightening and tapering fears, with Wood explaining: "It really depends on how hawkish
the Fed really is.
"

Fed Chairman Jerome Powell said on Tuesday that the Fed could end its bond-buying program
early in the face of rising inflationary pressures.
That could open the door for the Fed to raise rates earlier, though Powell stressed that tapering should not be seen as a sign of
an imminent rate hike.

Wood said: "In my opinion, they will fundamentally maintain a dovish position
.
If they suddenly decide to start tightening, I believe the market will fall
sharply.
Still, Wood said, "I still believe that the Fed will soon abandon tightening and move more towards financial repression, that is, further cutting off the link
between inflation and interest rates.
"