Oil prices are soaring and nothing appears to be stopping their ascent. December to January saw international benchmark Brent crude climb by roughly $11 a barrel, and it’s gone up nearly the same amount since the start of February, underpinned by supply concerns, rising inflation and geopolitical tensions.

Brent surpassing $100 a barrel is almost a given at this point, energy analysts say; but now, an increasing number of forecasters predict the commodity surpassing $125 a barrel and even higher. 

“Given that you’ve got this underinvestment in capital exploration, we’re running low on physical oil, we’re running short of supply,” John Driscoll, director of JTD Energy Services, told CNBC on Monday. “There is a scenario where we could vault past $120, even as high as $150” a barrel. 

Brent crude crossed $95 a barrel in the last week, its highest level since the summer of 2014 and a 63% increase year-on-year. It was trading at $93.98 per barrel on Wednesday at 10:20 a.m. in London. 

Tensions over the threat of a Russian invasion into Ukraine have also helped to push prices up, though a partial drawdown of Russian troops from Ukraine’s border areas on Tuesday led the commodity’s price to retreat about 3% from the previous day. While Moscow has rejected the assumption of an impending invasion, NATO leaders and U.S. President Joe Biden insist that the risk of war remains high. 

But it’s “not only the geopolitical tailwinds that we’re picking up, but the fundamentals,” Driscoll said. 

“The market is in what we call a steep backwardation which gives a premium to any prompt physical available oil. We’re starting to sense that demand is on its way to recovering, and we’re looking at supply shortfalls,” he explained. 

Those shortfalls exist both in terms of OPEC+ production — the alliance of OPEC and several non-OPEC countries — pumping oil below the levels it promised to add to markets, and sector underinvestment in the U.S. and other countries in the wake of Covid-19 and governments’ pushes to switch to renewables. 

OPEC+ members with quotas were short of their production targets by 700,000 barrels per day in January, with co-leaders of the group Saudi Arabia and Russia also pumping below their quotas, according to S&P Global Platts. This comes despite pledging to gradually unwind record supply cuts.

These aren’t the only signs of a continued bull run for oil: money is pouring into investments in oil-related stocks, and international oil companies are raking in massive profits. As inflation in the U.S. hits its highest rate in decades, analysts recommend energy stocks as smart investments. That inflation, aided by global supply chain issues, isn’t just hitting the prices at the gas pump but is also pushing up costs for oil drillers themselves, particularly in the U.S. shale patch. Oilfield services companies have said they will pass on their increased costs to producers.  

“As we increase the consumption, our spare capacity drops down, but you also see other key indicators like money managers, the non-commercials, pensions, piling into oil markets,” Driscoll said. “Stellar results from oil equities (like) BP, Shell, Total hitting recent highs.”  

Indeed, the S&P 500 Energy Sector Index is up more than 50% year-on-year.

Driscoll isn’t alone in his bullish call — J.P. Morgan this month forecast oil as “likely to overshoot to $125” per barrel “on widening spare capacity risk premium.”

“Supply misses are rising. Market recognition of strained capacity is also growing,” J.P. Morgan wrote in its Feb. 11 report. 

The Energy Information Administration lowered its OPEC capacity estimates by 300,000 barrels per day in February, and the producer group hasn’t shown any indication that it will deviate from its planned quota increases of 400,000 barrels per day in 2022, despite pleas from the U.S. and others to help lower oil prices. 

“This underperformance comes at a critical juncture – and in our view, as other global producers falter, the combination of underinvestment within OPEC+ nations and post-pandemic rising oil demand (as highlighted by Kolanovic et. al. here) will dovetail to a potential point of energy crisis,” analysts at J.P. Morgan said.

These factors along with continued global recovery from the coronavirus-induced economic crash mean there’s very little in the way of prices continuing to shoot up – something that could trigger an economic recession, energy ministers warned at the Egyps Petroleum Conference in Cairo this week. Analysts at RBC Capital Markets believe the only thing that could reverse the price climb is a crash in demand as the commodity’s price outstrips what buyers can afford. 

“We could be early, but the major cornerstone of our thesis over the next year, or longer, assuming the macro economy holds, is that the oil cyclewill price higher until it finds a level of demand destruction,” Michael Tran, commodity and digital intelligence strategist at RBC Capital Markets wrote in an analyst note on Monday. “It simply does not get more bullish than that.”

The bank sees oil hitting $115 per barrel or higher this summer. 

“Historically, markets led higher by tightening product and crude inventories are difficult to solve absent a demand destruction event or a supply surge, neither of which appears to be on the horizon,” Tran wrote.