The talks of $100/bbl are back in the mix. The Russian President Putin raised more speculation as he did not rule out oil breaching the century mark, terming it very much “on the cards”. Brent once again breached $80/bbl earlier this week, maintaining it for four straight trading sessions, sending oil back to 40-month high.
The International Energy Agency (IEA) further fueled the bull rally with another upward revision in oil demand growth forecast for 2021 and 2022. What is going on with other fuels such as natural gas, LNG and coal is going to have a lasting impact on oil demand and prices for the next four to six months. As economies around the world see revived demand in a high vaccination scenario, the extreme weather conditions around the world have further tilted the balance in favor of oil bulls.
Natural gas and energy futures in the Western world have gone up as much as 20 times from last year, and more and more countries are gasping for more oil. While the container availability and movement is much improved from two months ago, experts have warned of another round of transportation blockade as more oil gets readies to be shipped. The IEA sees oil demand to soar by half a million barrels per day, as a result of switching from coal and gas to crude oil.
The Opec Plus group has brushed aside any suggestions of upping the ante. Saudi Arabia, the leader of the group dismissed rumors of relaxing oil production quotas, insisting the earlier decided plan of phased rollout increase is intact, and is the key to keep oil from the massive swings witnessed in gas and coal prices.
There is more that pushed the oil prices as the US Energy Information Administration said the crude oil output in the US is now expected to decline more than earlier forecast. The fuel stockpile also showed signs of decline earlier this week. This is now shaping up to be the harshest winter especially for fuel importing countries. Pakistan can just sit back and watch, in the hope that the tide turns in its favor. Not that it can do much else.