ISLAMABAD
The oil bull run shows no signs of retreat, with resilient global demand despite record-high Omicron cases.
Oil prices surged for the fourth straight day on Wednesday to a seven-year high on supply concerns, pointing to further gains in the futures market. As of 1325 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.55 (+0.63 percent) to reach $88.06 a barrel.
On the other hand, the US West Texas Intermediate (WTI) price reached $86.06 a barrel, up by $0.63 (+0.74 percent).
The price for Opec Basket was recorded at $86.54 a barrel with a gain of 1.26 percent, Arab Light was available at $87.80 a barrel with an increase of 0.21 percent and the price of Russian Sokol jumped to $89.80 a barrel with an increase of 0.16 percent.
The supply concerns are giving the market a solid boost. The oil market reacted to news from the United Arab Emirates after reported attacks by Yemen’s Houthi movement, sparking fears of supply disruptions. Moreover, an explosion in an oil pipeline from Iraq to Turkey increased concerns amid worrisome geopolitical troubles in Russia and Ukraine. Russian troops are lined up on the border of Ukraine, with the White House calling the crisis extremely dangerous and saying Russia could invade at any point.
The other major driver for the tight supply on the market is that cargo prices are rallying. Traders and refiners seem to believe that the feared threat to demand from the new variant was overblown, and are now back to the market buying cargoes much more than they did at the end of November and early December when the impact of Omicron was still a very large looming threat.
The Opec+ is still nowhere near pumping to its overall quota, and this narrowing cushion could turn out to be the most bullish factor for oil prices over the coming months.
The Opec+ group, led by Saudi Arabia and Russia executed a historic reduction of 9.7 million barrels per day between May 2020 and July last year, but has tapered the supply cuts as demand improved. The group agreed to add another 400,000 barrels of oil per day to the market from February.
