Oil prices (BZ=F, CL=F) have risen above $85 per barrel, the highest level since October 2023. With OPEC+ maintaining supply cuts and the possibility of Federal Reserve rate cuts on the horizon, could there be more upside ahead?

Rystad Energy SVP and Head of Global Oil Macro & North America Research Director Claudio Galimberti joins Yahoo Finance to discuss the rising prices of oil and how the energy sector will operate moving forward.

Galimberti claims with geopolitical tensions and cuts from OPEC, it's easy to see how to get to triple-digit prices: "The OPEC cuts have created a huge deficit. Demand remains strong... We are seeing Ukraine just, as of yesterday, attacking a big refining in Tatarstan, which is something like a thousand kilometers from the border, from the Russian border, so there is an escalation in the war between Ukraine and Russia, specifically targeting Russian oil facilities. Russia is a major oil producer. So, the moment you have potentially 500,000, a million barrels a day temporarily impacted, this is when you can see oil prices notch up potentially another $5, $10, and then you are in triple digits." However, he notes that spare capacity in the Middle East could help keep prices from going too high.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Video Transcript

MADISON MILLS: So to discuss, we have Claudio Galimberti, Rystad Energy SVP joining us. And thank you so much for being here, Claudio. I'm curious, just what is your top line projection for where we could see the price of oil going this year?

CLAUDIO GALIMBERTI: Thank you very much for inviting me back. Well, it's always hard to tell where the oil prices will end up being. But, clearly, they've been on an upward trend, an upward trajectory, which we forecasted at the beginning of the year.

And this is primarily due to the OPEC cuts, which were renewed today and through the end of Q2. So I would say that until the OPEC cuts are in place, we are on an upward trajectory. Of course, there are some factors to the downside that we need to take into account. But they are dwindling down.

So we were-- probably, a few months ago, we're concerned about demand. We are no longer concerned. There are a lot of geopolitical reasons to be concerned about supply risks. Therefore, I would say, triple digit oil prices are not that far at this point. And this is where we could end up in the next couple of months for sure.

SEANA SMITH: I was going to say, Claudio, how soon could we see those triple digit prices?

CLAUDIO GALIMBERTI: Well, this depends on a few things. Right now, we are on a very tight market. The OPEC cuts have created a huge deficit. Demand remains strong. What could bring the prices up is a big outage.

We are seeing a Ukraine just as of yesterday attacking a big refining in Tatarstan, which is something like kilometers from the border-- from the Russian border. So there is an escalation in the war between Ukraine and Russia, specifically, targeting Russian oil facility.

Russia is a major oil producer. So the moment you have potentially 500,000, a million barrels a day temporarily impacted, this is when you can see oil prices notch up, potentially, another $5, $10. Then you are in triple digit.

But there is one very important element that we need to take into consideration, which we highlighted for the past few months, which, in my view, will keep, let's say, a cap on the upper movement of prices.

And that is basically the big spare capacity we currently have in the Middle East.