Oil prices reach highest level in seven years

Report by Abdulaziz Al-Mujren KUWAIT, The past week saw a surge in oil prices as they reached their highest levels in seven years. This accelerated rise could be attributed to the global geopolitical situation in Eastern Europe and the Middle East which raised concerns regarding oil supply. The price of the Kuwaiti oil barrel also saw a rise in pricing as it exceeded the USD 90 pb for the first time since October 2014. Last Thursday, it reached USD 91.23 pb according to Kuwait Petroleum Corporation. On a global level, Brent crude oil futures contracts reached USD 90.3 pb, and West Texas Intermediate rose to USD 86.82 pb. In a statement to Kuwait News Agency (KUNA), oil analyst Dr. Khaled Bodai attributed this leap in oil prices to several reasons amongst which is OPEC + coalition?’s commitment to not oversaturating the market. The coalition committed to proceeding with a production hike of 400,000 barrels per day (bpd), which balanced between supply and demand and curbed influx pressure on market prices. Dr. Bodai added that the global market is witnessing a state of rejuvenation after the dwindling of coronavirus cases, which increased demand on oil and expanded several economic activities. He clarified that investors returned to the oil market with the regression of the pandemic, which created added demand and subsequently, an increase in prices. He also mentioned other factors that contributed to the price change, including the faltering of oil supply caused by geopolitical tensions in Eastern Europe and the Middle East. Dr. Bodai commented saying that the serious turn towards renewable energy caused investors in field of oil exploration and extraction to be reserved in terms of increasing their investments, which lowered possibility of oversaturating oil markets and further assisted the rise in prices. He added that pressures imposed on countries relying on coal as the main source of energy because of the environmental pollution coal causes, bolstered crude oil and gas as they are the available alternatives to coal, commenting that it is not implausible that oil prices reach USD 100 pb. Bodai indicated that oil producers do not wish for prices reach this level as this will encourage production in high-cost areas, bringing in new producers into the market and severely pressuring prices. Bodai estimates that OPEC+ will be pressured internationally to pump more oil in markets when prices reach high levels, so that prices fall back to USD 75-80 pb, which he considers a reasonable price for both OPEC and global markets.

Source: Kuwait News Agency

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