$150 Oil: Bank of America Sees Rising Prices as a Persistent Constraint

Bank of America commodity analyst Francisco Blanch is warning that Brent crude may need to surge above $150 per barrel before demand finally gives way. This prediction comes as oil prices have been fluctuating due to ongoing disruptions in the Gulf, including Iran's threat to close the Strait of Hormuz if Washington eases military pressure.

Despite these disruptions, which Blanch says are behaving less like a temporary shock and more like a persistent constraint, the global economy has so far absorbed the shock surprisingly well. Governments are spending freely, monetary conditions remain loose, and nominal growth is strong.

The bank's problem is that the mechanism of rising oil prices containing their own cure has barely started working. Energy spending remains manageable relative to nominal incomes, while global economic activity continues to expand.