Oil prices have risen to their highest for more than seven years, climbing above levels that triggered a U.S.-led release of strategic petroleum reserves last November. Policymakers may be less likely to respond at this time as consumers and businesses have had more time to grow accustomed to prices around current levels, Reuters reports.The most recent issue of OPEC’s monthly report reiterated the oil group’s view that oil markets will remain well supported over 2022, with global demand rising 4.15 million b/d year-on-year, surpassing the 100 million b/d mark in Q3, OilPrice said.
The Houthi drone attack on the United Arab Emirates triggered a swift escalation in one of the most important oil-producing regions globally, adding a hefty geopolitical price premium to markets. With Omicron failing to significantly dent global crude demand and recent reports suggesting that it is less likely to damage lungs than previous variants, oil prices shot up in the first two trading sessions of this week.
UAE attack sends regional tensions flying. A deadly missile attack on ADNOC’s storage area in the industrial Musaffah area close to the Abu Dhabi airport triggered a sudden deterioration in the Arabian Peninsula’s security climate, making further attacks likely. Libyan oil production comes back. Following last week’s restart of four crude and condensate fields in Libya’s western regions, the North African country has seen its production move to 1.2 million b/d. This brief respite doesn’t change the fact that future disruptions remain likely as a general lack of funds makes proper maintenance difficult, OilPrice reports.
Escalating oil prices will become politically sensitive. Policymakers may be less likely to respond at this time as consumers and businesses have had more time to grow accustomed to prices around current levels. However, if prices rise nearer to $100 per barrel and look like they will continue increasing, the probability of intervention will grow rapidly. In the advanced economies, oil, gas and electricity are some of the most sensitive prices for households and businesses and therefore for elected policymakers, Reuters said.