Oil hit its highest since 2014 on Tuesday, with Brent futures reaching $99.50 a barrel after Moscow ordered troops into two breakaway regions in eastern Ukraine.
The bank sees Brent heading to $120 a barrel by mid-2022, with fundamentals justifying a near-term spike and demand projected to rise by 3.6 million barrels per day (bpd) to surpass pre-pandemic levels at nearly 101 million bpd this year.
"A weaker dollar trend and a pro-growth macro backdrop, if it indeed occurs, could support crude near triple digits in the second half of the year," the bank said in a research note.
A potential nuclear deal with Iran and associated sanctions relief would quickly translate into lower oil prices, the bank's analysts noted.
Analysts at BofA believe Brent prices will need to average $60 to $80 per barrel to keep the global oil market in balance out to 2027.