Oil prices have been rising steadily for months, ergo average gasoline prices have risen to their seven-year highs.
Expectations from last week were that oil prices would stabilize or increase gradually, but the last OPEC meeting ended with a stalemate on the expected decision, namely how much oil to produce.
And now observers are expecting everything: from a drop in prices to a super-growing trend. What is certain is that there is nothing certain about how the cost of black gold will move.
Last year, when the Coronavirus pandemic spread around the world, the demand for oil dropped rapidly and greatly.
The world stopped driving, flying, sailing and the markets went haywire.
Given this situation, oil producers have reduced production, including the historic cut in production in the group of OPEC countries, with Saudi Arabia and Russia in the lead.
Now the pandemic is waning and the demand is growing again. Big countries, like the United States and China, are restarting industries and there is a need for oil. Just as there is a need for fuel for travel, holidays, cruises.
Among the main reasons for the mismatch between supply and demand is that OPEC has taken a very gradual approach to bringing oil back to the market. The goal is clear: to keep prices high, increasing revenues for producing countries.
American producers who have produced less than expected are doing the same and are pledging to give more money to their investors.
The result was a different market from that of a year ago. Now we are in a market that, after the short break last spring, has caused prices to rise steadily.
In the last OPEC meeting there was a political war between the United Arab Emirates who wanted to be able to produce more oil individually and Saudi Arabia which opposed it.
The stalemate caused only caused the certainty that the imbalance between supply and demand will be destined to grow even more than expected. Furthermore, two hypotheses worry analysts: if the cartel does not sign a new agreement to increase production and if the current agreement remains in effect, prices could rise to $ 90 a barrel.
Too high a price that would lead to a rise in gas prices and affect many sectors that depend on oil. One among all that of the airlines.
On the other hand, if OPEC decides to abandon its current production cuts, there could be a free-for-all that would flood the oil market with a sharp drop in prices.
The only hope is that OPEC will close a reasonable deal by ending its internal war.
In 2020, OPEC drove prices crazy thanks to a price war between Saudi Arabia and Russia. Fortunately resolved with the historic agreement to cut production, which rebalanced the markets.
In the United States, the Biden administration is concerned about the prospect of rising gas prices.
The White House has spoken directly to multiple OPEC members and is urging a compromise to increase production.
Now everything is possible in a fast-paced industry like the oil industry where, despite everything, OPEC still represents the conductor.