On the Asian markets, the barrel of Brent was trading at 87.83 dollars (+ 1.56%), exceeding the level of October 2014
The oil price continues his race and the Brent reaches its highest level in over seven years, driven by interruptions of the offer, from strong geopolitical tensions and sustained resumption of demand despite the Omicron variant of Covid (read here to find out more).
Sui Asian markets the barrel of Brent was traded in $ 87.83 (+ 1.56%), surpassing the level of October 2014 ($ 86.74), the day after peaking since October 2018. The barrel of the Wti gained 1.38% at $ 85.43, surpassing last October’s peak ($ 85.41) which was the highest since 2014.
Several factors are contributing to this new rally of oil, including production interruptions “in Libya, Nigeria, Angola, Ecuador and, more recently, in Canada due to the extreme cold, “according to Exinity analyst Hussein Sayed.” markets remain focused on the delicate balance between supply and demand, which appears to have a rather large impact on price fluctuations during the post-pandemic economic recovery, ”notes Xtb analyst Walid Koudmani.
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Oil, geopolitical tensions are growing
Add i to the equation geopolitical risks, and this is happening simultaneously in different areas of the globe, since Gulf to Ukraine. Yemeni Houthi rebels attacked yesterday civilian facilities in the United Arab Emirates, killing three people. A Saudi-led military coalition reacted with air strikes on Sanaa, the Houthi-controlled capital of Yemen.
Washington on his part he said that he “held the Yemeni rebels, who are supported by Iran, responsible” for the attacks. These events “further stimulated oil prices”, noted Ing analyst Warren Patterson.
The eyes are also focused on persistent threat of a Russian invasion of Ukraine. According to some analysts, with further disruptions to Russia’s gas supply to Europe, energy prices, and therefore crude oil, could rise further. THE natural gas prices, still very high, are contributing toincrease in the price of oil. The result is “an increase in demand for diesel and fuel oil to replace natural gas where possible,” emphasizes Bjarne Schieldrop, an analyst at Seb.
As for the Omicron variant of Covidinitially perceived as a threat to crude oil purchases, it is proving less severe for demand than the variants that preceded it.
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Oil, OPEC in “position of strength”
“Only OPEC members and their allies can reduce prices at this point pumping more crude, “says Sayed.” Instead, the cartel of producing countries and allies are likely to stick to their strategy of gradually easing production cuts while taking advantage of current high prices, “he continues. OPEC + announces month. after month, marginal increases in their extraction targets and struggles to reach them, which should not allow to meet the demand.
At the beginning of the yearSaudi Arabia he had stated that compliance with the agreement and ceilings was essential. In other words, members with spare capacity cannot and should not intervene to compensate for the lack of production of those unable to meet their limits.
“The OPEC + output gap is set to widen, with Russia the next big deficit driver,” predicts Joel Hancock for Natixis. According to the expert, since the growth of the oil supply outside theOpec + and outside the “relatively weak” United States, it will be necessary to “appeal to US shale oil to meet projected growth in consumption.”
During the pandemic, the collapse in crude oil prices had led toinsolvency of shale oil drilling companies, whose production cost is much higher than the light oil drilled, for example, in Saudi Arabia. Many analysts now expect crude oil prices to rise above $ 90 a barrel, or even $ 100, an estimate that seemed impossible a few months ago. Goldman Sachs analysts they expect Brent to reach $ 96 a barrel this year, and 105 share backgrounds in 2023.
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