FXStreet reports that Jack Manley, Global Market Strategist at JP Morgan said that the surge in oil prices is likely transitory.

“Clearly, production cuts will help keep oil prices elevated. However, a number of forces may counteract short-term supply issues. To start, the pandemic has illuminated the effectiveness of working-from-home, which could result in fewer commuters on the road and less need for gasoline. Furthermore, demand for air travel remains depressed, and the combination of smaller fleets and an uneasiness about flying with strangers, even after vaccination, could put a strain on jet fuel prices. Finally, while the deep freeze in Texas temporarily disrupted US energy production, it did not change the fact that the US has become the marginal producer in global energy markets and OPEC+ is no longer able to unilaterally affect global supply.”

“Investors should recognize that this surge in oil prices is likely transitory, and that while OPEC+ is able to capitalize on short-term disruptions now, it will not be able to forever.”