Oil To $300? Economist Peter Schiff Says Central Bank Excesses Could Trigger A Bull Run That 'Won't End'

Crude oil futures have begun a steady uptrend amid supply fears following some OPEC+ members deciding to continue with production cuts. An economist said the bull run is unlikely to end.

What Happened: The current uptrend is likely going to be a historic move up in oil prices, said Peter Schiff. He noted that the commodity traded as high as $150 per barrel in 2009.

"Think about all the inflation global central banks have created since then,” the economist said. He apparently was referring to the quantitative easing implemented by the global central banks to tackle inclement economic and geopolitical conditions.

Quantitative easing refers to the monetary policy adopted by central banks to increase the money supply in the economy and thereby fuel growth. This in turn increases the demand for oil, driving up prices of the commodity.

It is to be noted here that the Federal Reserve resorted to stimulatory measures to revive the economy in the aftermath of the global financial crisis and subsequently the COVID-19 pandemic.

Schiff also hinted at an extended bull run in oil. “At a minimum, this bull run won't end until $300 per barrel,” he said.

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Why It's Important: The rise in oil prices poses a headache to central banks, which are believed to be in the last leg of a rate-tightening cycle. Stubbornly high oil prices have the potential to fuel inflation and prevent the Federal Reserve and other central banks from dropping their guard.

The Fed's dual mandate while formulating the monetary policy is to ensure full employment and maintain price stability.

ING economists said in a recent note, “Surging oil prices have become the new concern for central banks, aggravating the current trilemma: how to balance slowing economies, still too-high inflation, and the delayed impact of unprecedented rate hikes.”

The firm's commodity analyst, however, doesn't expect oil prices to remain above $100 a barrel for long as weaker demand and political pressure to increase supply should help to bring oil prices back to levels slightly above $90 a barrel.

The United States Oil Fund, LP USO ended Wednesday’s session up 2.50% at $82.90, according to Benzinga Pro data.

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