Bank of America believes that the Federal Reserve and Saudi Arabia are locked in a battle royale over oil, and that crude prices are likely to remain under pressure until the Fed withdraws from its monetary tightening policy.
In a note reported by Insider, the US bank pointed to the downward trend in oil prices compared to last summer, when prices exceeded $100 levels.
The declines in prices over the course of this year are due to the monetary tightening policy by the Federal Reserve, which raised expectations that weaker economic growth would prevail, which would outweigh the impact of Saudi production cuts.
And Saudi Arabia decided earlier this month to implement an additional voluntary reduction in production by one million barrels per day next month.
According to Bank of America, the price of oil will rise to $80 a barrel by the end of this year, as the Fed is likely to end its interest rate policy.
