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July 7, 2021

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Price of crude oil gushes to highest level in years

New York oil rose to almost a seven-year pinnacle yesterday after OPEC+ crude producers failed to agree on lifting output despite demand soaring along with the global economic recovery, sparking fresh inflationary fears.

West Texas Intermediate crude for August delivery hit US$76.98 per barrel, a level last seen in November 2014.

The price of Europe’s Brent North Sea oil advanced to a November 2018 peak of US$77.84. The OPEC+ group on Monday canceled a planned meeting that was supposed to overcome an impasse between the United Arab Emirates and other members on how to lift output. No new date has been set.

“Oil advanced ... as OPEC+ abandoned its July meeting, after the UAE stood its ground over production increases,” said analyst Neil Wilson. “The failure to agree to increasing production in August and beyond leaves the market even more in deficit than before, so ... WTI spiked to a near seven-year peak this morning close to US$77.”

Oil producing nations have slowly lifted output in recent months after turning the taps down last year in response to a collapse in prices caused by coronavirus lockdowns.

With demand rocketing on the back of the global rebound — and the American holiday driving season underway — officials had planned to hike output each month by 400,000 barrels a day from August to December.

However, no new supplies will be forthcoming.

The breakdown of talks between OPEC and other key crude nations raised the possibility of oil hitting US$100 — a level also not seen since 2014.

“Some speculators believe that given the strong economic recovery that we are experiencing around the globe, it may not be a surprise if Brent oil comes close to US$100,” said AvaTrade analyst Naeem Aslam.


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