Monday, October 18, 2021

Oil hits 7-year high after OPEC+ cautious hike decision

by David McHugh and Aamer Madani

FRANKFURT, Germany (AP) – Oil prices rose on Monday after OPEC and allied oil-producing countries agreed to add just 400,000 barrels per day in November with their gradual approach to restore production shortfalls during the pandemic. The jump came

The decision on Monday by the Vienna-based oil cartel with non-members including Russia, in line with its established program of adding back that amount of oil every month until 2020 deepens to support prices during the depths of the pandemic downturn Unless the cut is made, it is restored. Year.

The situation has since changed as the global economy has improved. The decision comes amid strong demand for oil products such as gasoline and jet fuel as driving and flying pickup across the world due to the easing of restrictions aimed at containing the COVID-19 pandemic.

On top of that, unusually high prices for natural gas are prompting some power producers in Asia to switch from natural gas to oil-based products, helping support prices.

The price of a barrel of crude oil soared to $78.38, the highest since 2014, then traded up 2% for the day at $77.87 on the New York Mercantile Exchange. The Brent international benchmark was up 2.9% at $81.57.

Björner Tonhaugen, head of oil markets at Rystad Energy, said: “Producing countries, namely OPEC+, have to be careful not to increase prices too much, otherwise we could see an adverse reaction that negatively impacts post-pandemic economic growth.” can affect it.” .

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“Nevertheless, OPEC+ will certainly monitor market developments and may amend the policy if needed,” Tonhaugen said. OPEC+ has scheduled its next meeting on 4 November.

White House National Security Adviser Jake Sullivan expressed concerns about rising oil prices last week during a meeting with officials in Saudi Arabia, a key OPEC member, over the war in Yemen, White House Press Secretary Jen Psaki said. was largely focused. Sullivan and other members of his delegation reiterated the importance of creating conditions to support the global economic recovery caused by the coronavirus pandemic, Psaki said.

Psaki said on Monday that White House officials have been in dialogue with OPEC members about prices and were looking for tools to address the issue as Brent crude topped $80 a barrel last month.

“We will continue to use every tool at our disposal, even if we are not a member of OPEC, to make sure we can keep gas prices down for the American public,” she said.

According to the Motoring Club Federation AAA, the price of crude oil is about half the price of gasoline at the pump in the US, with petrol prices holding steady at around $3.20 a gallon in recent days. The average is 97 cents higher than a year ago.

Madani contributed from Washington.

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