The price of Oman crude struck a 2018 pinnacle crossing US$76 per barrel on Tuesday after OPEC+ oil producing countries failed to agree on lifting crude output despite improving demand due to global economic recovery.
Oman crude oil contract price (for September delivery) rose 1.8 per cent to hit US$76.09 per barrel at the Dubai Mercantile Exchange on Tuesday, a level last seen in October 2018.
US oil benchmark West Tax Intermediate (WTI) rose to its highest level in nearly seven years, sparking fresh inflationary fears. WTI crude for August delivery hit US$76.98 per barrel, a level last seen in November 2014.
The price of Brent crude advanced to a November 2018 peak at US$77.84 in London.
According to a DME statement, the average price of Oman crude (for July delivery) has stabilized at US$66.40 per barrel, which is US$3.30 per barrel higher than the average price for June delivery.
The OPEC+ group on Monday cancelled 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,” Markets.com analyst Neil Wilson told AFP.
“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,” he said.
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 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.
The spike in oil prices has reignited fears about strong global inflation, which could force central banks to hike interest rates earlier than thought – and potentially derail the post-pandemic recovery.
Rallying commodity prices have already played a key role in rebounding consumer prices in recent months.
“Surging oil prices are not good news for the global economic recovery,” said OANDA analyst Sophie Griffiths.
(With inputs from AFP)
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