Muscat – Oman crude prices surged more than 3 per cent on Tuesday to nearly US$80 per barrel as OPEC+ kept to its plan to not boost oil output further.
According to data from the Dubai Mercantile Exchange (DME), where Oman crude is traded, DME Oman contract price rose by US$2.35 to close at US$79.48 a barrel, the highest level since the beginning of
World oil prices surged on Tuesday to new multi-year peaks, extending a bullish run one day after OPEC and key allies – known as OPEC+ – decided to stick with their planned moderate increase next month, despite the recent surge in prices.
The price of the main international contract, Brent crude, jumped above US$82 a barrel. The US oil prices soared to US$78.56, their highest level since November 2014.
OPEC and other major producers opted on Monday against increasing output by more than previously agreed – despite tightening supplies and rising demand.
The OPEC+ grouping decided to stick with their planned increase next month in oil production of 400,000 barrels.
“The decision by OPEC+ to add the expected 400,000 barrels per day in November triggered a market reaction, as traders are now more boldly coming out from their cautious positions and pricing in a confirmed, tighter supply market,” said Bjornar Tonhaugen, head -oil markets at Rystad Energy.
Some economists are worried that sustained oil prices of US$80 per barrel could undermine the recovery of the global economy, already under strain from snags in supply chains.
“Producing nations, and namely OPEC+, have to be careful not to allow prices to inflate too much, otherwise we may see an adverse reaction that could negatively impact post-pandemic economic growth,” Tonhaugen said.
Markets.com analyst Neil Wilson said, “OPEC+ gave oil bulls a red rag to bid up futures contracts as it stuck to the planned increase. It’s not that demand is suddenly forecast to improve – it’s more that OPEC+ is keeping such a tight grip on supply.”
The average price at which Oman sold its oil during the January–August period of 2021 increased 48 per cent to US$67.9 per barrel against US$46 per barrel average price recorded in 2020.
S&P Global Ratings on Saturday said that economic and fiscal pressures on Oman are easing, as the effects of the sharp drop in oil prices in 2020 and the COVID-19 pandemic abate.
Encouraged by higher oil prices and progress on fiscal reforms, S&P upgraded its outlook on Oman to ‘positive’ from ‘stable’ and affirmed its ‘B+/B’ long- and short-term foreign and local currency sovereign credit ratings for Oman.
(With inputs from AFP)