Brent crude, the international oil benchmark, topped $80 a barrel on Tuesday for the first time in nearly three years amid growing signs of an energy crunch.
Oil prices have leapt by about a quarter over the last month as fears of a looming tight market have overcome concerns about the Delta variant slowing the global economic recovery. Soaring prices for natural gas are also influencing the oil market, analysts say, as some industrial users of gas switch to oil and other fuels.
This may be the first time that “gas impacts oil and not the other way around,” said Carlos Torres Diaz, head of gas and power at Rystad Energy, a consulting firm.
Brent crude rose as high as $80.70 a barrel on Tuesday. West Texas Intermediate crude, the U.S. benchmark, was also approaching a three-year high, reaching $76.64 a barrel.
Analysts say that outages caused by Hurricane Ida, which damaged oil platforms and infrastructure in the Gulf of Mexico in late August, have outweighed the modest increases in output agreed by the Organization of the Petroleum Exporting Countries in July.
OPEC and its allies including Russia are likely to come under pressure to speed up their plans for supply increases when the group meets by teleconference on Oct. 4. The group has already been criticized by the Biden administration for not doing enough to cushion price increases.
The long lines at gas stations in Britain, while caused by shortages of fuel truck drivers rather than oil, may also be adding upward pressure to prices.
Analysts at Goldman Sachs recently forecast that Brent would hit a peak of $90 a barrel in December, noting that global inventories are being burned off at what they described as a record rate.
“The current global oil supply-demand deficit is larger than we expected,” they wrote.
At the same time, the analysts said that successful coronavirus vaccine programs were “leading more countries to reopen, including to international travel.”
Aviation fuel has been the key laggard in the global recovery of oil demand, and so a pickup in air travel would be an important factor in bolstering the market.
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