ISLAMABAD
Crude oil prices continue to trade at seven-year highs amid colder weather, supply concerns and threat of a Russian attack on Ukraine.
As of 1305 hours GMT on Friday, Brent, the international benchmark for two-thirds of the world’s oil, gained $0.82 (+0.92 percent) to reach $90.16 a barrel. On the other hand, the US West Texas Intermediate (WTI) price reached $87.26 a barrel, up by $0.65 (+0.75 percent).
The price for Opec Basket was recorded at $87.35 a barrel without any change, Arab Light was available at $89.18 a barrel with an increase of 0.47 percent and the price of Russian Sokol jumped to $90.89 a barrel with 0.45 percent increase.
Oil prices rose amid concerns that supplies could become tight due to Ukraine-Russia tensions. Moreover, cold weather in Japan and parts of northern China lifted demand and amid concerns over European supply disruptions from Russia.
Oil has been on a remarkable run in recent weeks, driven by very bullish fundamentals as disrupted supply struggled to keep up with strong demand. The Opec+ and the IEA have referenced the resilience of demand since the emergence of Omicron in recent weeks and the inability of Opec+ to hit their production targets, or even come close, has led to the hike in prices.
The Opec’s underproduction also fuels speculation about the cartel’s ability to ramp up production. The Opec’s spare oil production capacity was a problem that was only going to get worse with time became clear last year when the first reports began to emerge that the cartel and its partners led by Russia are not adding as much oil to their monthly output as agreed. Now, the gap between commitment and output has deepened, adding fuel to an already strong price rally.
The Opec+ added 253,000 barrels daily to its combined production in December, falling well short of its 400,000-bpd target for yet another month in a row. Naturally, this fuelled concern about the security of global supply amid forecasts from the International Energy Agency that oil demand is going to exceed pre-pandemic levels later this year.
