Wall Street in Riyadh sees lingering inflation, oil hitting $100

© Reuters. FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant

By Davide Barbuscia, Saeed Azhar and Yousef Saba

RIYADH (Reuters) -Top Wall Street firms warned at an investment conference in Riyadh of the risk of a sustained increase in prices with BlackRock (NYSE:BLK), the world's top asset manager, saying there is "high probability" of oil hitting $100 a barrel.

Federal Reserve Chair Jerome Powell last week said the U.S. central bank should start the process of reducing its support of the economy by cutting back on its asset purchases, but should not yet touch the interest rate dial.

He reiterated his view that high inflation will likely abate next year as pressures from the pandemic fade.

Speaking at a flagship investment conference in Saudi Arabia, however, PIMCO Vice Chairman John Studzinski said inflationary pressures are likely to continue in the next few years. "Fewer and fewer people think it’s transitory."

Goldman Sachs (NYSE:GS)' Chief Executive David Solomon also said a lengthy accommodative monetary policy risks higher inflation.

"We're looking at a high probability of $100 oil," said Larry Fink, chairman and CEO of BlackRock.

Goldman Sachs earlier this week predicted that a strong rebound in global oil demand could push Brent crude oil prices above its year-end forecast of $90 per barrel.

Currently Brent crude is trading at $85.7 a barrel.

Natural gas prices are at record levels in Europe and Asia, as major markets like China struggle to find enough fuel to meet demand that has bounced back from the coronavirus-induced downturn faster than anticipated.

Saudi Arabian Mining Co (Ma'aden) CEO Abdulaziz al-Harbi also told Reuters commodity prices are hitting new highs, but will hit an equilibrium towards the end of 2022.

"Definitely the prices which we are seeing now is a supercycle and it's driven by the energy crisis and also the logistics bottleneck which we are seeing across the world currently."

"I think in the future there should be balance, in the near future, probably end of 2022. And I think prices are going, really, to sustain - but not at that high level."