DUBAI: The price of crude oil reached its highest level for seven years on Tuesday as demand for crude recovers from the pandemic recession, with some experts predicting it will go through the $100 per barrel mark next year.
Brent, the global benchmark, closed at $87.29, while the US standard, West Texas Intermediate, was not far behind at $85.24, both at the highest levels since late 2014.
Analysts said the main reason for the spike was the prospect of growing demand as markets take an increasingly optimistic view on the omicron coronavirus variant.
US investment bank Goldman Sachs said Brent was likely to rise above $100 this year, with a deficit in supply likely because omicron’s negative effect on demand had so far been smaller than feared.
The oil exporters’ group OPEC said it expected global oil markets to remain “well supported” in 2022, and that the impact of the omicron variant would be “mild and short-lived.”
Robin Mills, chief executive of energy consultancy Qamar, told Arab News that the demand recovery was the main reason for the recent price surge.
However, there were also concerns that some members of the OPEC+ alliance of producers — led by Saudi Arabia and Russia — would not be able to meet their ever-increasing targets under the organization’s plans to restore market balance.
“Of course, the Kazakhstan, Libya and Abu Dhabi security issues have given some short-term impetus,” Mills said.
Other experts pointed to the possibility of a resurgence of American shale production at current price levels, as well as an increase in demand, especially in the US, as gasoline prices soared.