Oil prices could hit $120 a barrel within the next two years if the global economy avoids sliding back into recession, says BlackRock Managing Director Dan Rice.
Oil is trading around $99 a barrel, a little volatile on uncertainty whether Europe will work through its debt crisis and avoid a serious economic meltdown.
"We are out there trying to pick longer-term commodity prices, not necessarily where crude oil is going to be next week, but where it’s going to be two or three years down the road," Rice tells CNBC.
"We think there is a really good chance crude oil is going to be substantially north of $120 if the world economies do not go into recession."
China, not the U.S., is the top driver of oil prices.
"They're growing their oil demand 800,000 barrels a day, a huge number," Rice says.
"Out of the 1.3 million barrels of world oil demand growth, 800,000 is China alone."
That means energy companies make good investments these days, including natural gas and coal plays.
Oil markets have been playing close attention to U.S. debt-limit talks.
Failure to lift a $14.3 trillion debt limit by Aug. 2 could result in a government default, which could disrupt the global economy.
For now, markets are optimistic.
"We believe that a last-minute stopgap deal will be reached, averting worst-case outcomes," Bank of America Merrill Lynch says in a report, according to the Associated Press.
"But it will fail to provide a credible long-term fiscal solution or lift rating agency concerns."
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