The highest price of oil in seven years – an energy analyst believes that the price of oil will continue to rise

The highest price of oil in seven years - an energy analyst believes that the price of oil will continue to rise

On Friday night, oil prices reached levels not seen in seven years. A barrel of spot North Sea Brent oil was trading for $86.85 shortly before the close on Friday. The price of oil reached its highest level since October 2014.

Since December 1, the price of what is used as a benchmark contract for oil trade worldwide has risen by about 25 per cent. Friday’s price hike corresponds to an increase of more than 2.7 percent.

Male in December Partner and energy analyst Nadia Martin Wiggin at Pareto Securities to DN said they believe the oil price will be around $80 by the end of the first quarter of 2022 and up to $85 before the summer.

“It seems we’re getting to it a little faster than initially thought,” Wiggin says in Pareto Securities.

The coronavirus restrictions have reduced activity and reduced flights, reducing demand for oil and gas. She explains that now that more countries have relaxed coronation measures, there is pent-up demand.

Low oil stocks

Wiggin notes that the market is tight, despite the fact that members of the expanded OPEC+ oil cartel have agreed to increase oil production.

– Pareto Securities does not believe that the planned increases in production are sufficient to sufficiently increase oil stocks. She says that OPEC+ will have to produce more oil to balance the market.

– The most important factor in the market is the decline in global oil stocks, which is already driving up oil prices. It is uncertain whether there will be enough oil for the summer, when we are historically seeing the highest demand.

US oil stocks are below their lowest level in five years. Globally, oil stocks are at their lowest level since 2014, when oil prices reached nearly $115 a barrel.

“We believe that oil prices will continue to rise from $86 a barrel over the next five months, as demand picks up and grows faster than it was in 2014,” Wiggin said.

China’s biggest risk factor

The biggest immediate danger is China, where the omicron variant was discovered in Beijing, before the Chinese New Year and the Olympic Games.

Usually, China consumes a lot of oil during New Year’s celebrations and in preparations for the Olympics. During the Olympics, demand is likely to drop for two weeks, as Beijing will prioritize clean air. Wiggin says the disruption to oil demand could significantly affect global shipments and could cause a temporary shock.

The supply crisis at that time feared China’s strict measures against the virus

How could China’s virus-free strategy affect global supply chains? Bloomberg’s Enda Curran explains how recent outbreaks in China are making the world nervous.



This week it became known that China and the United States agreed to release oil from storage around the Chinese New Year, which is February 1. The agreement comes as a result of the United States’ desire to reduce global oil prices, according to news agency sources with whom Reuters was in contact.

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“Of course, every time the authorities do this, they remove oil from stocks that should have been available in real crises, like the war in the Middle East that could have halted oil exports,” Wiggin says.

Wigin also highlights geopolitical tensions in Kazakhstan, Russia, and Ukraine. The rise in gas prices supports the rise in oil prices. It says an escalation of the conflict between Russia and Ukraine could raise prices.

Stand out from 2014

After record levels in June 2014, oil prices collapsed as US shale oil flooded the market. Wiggin doesn’t think history will repeat itself this year.

– The reason for this is that 2014 was the first year in which OPEC invited Russia to participate in possible cuts in oil production, which Russia rejected. Today, OPEC+ is a very efficient body, so we don’t think that oil prices will fall nearly as much in 2014 and 2015. On the other hand, oil prices will rise higher, as the forecast is now free from any major threat of more deliveries from non-OPEC countries. Members of OPEC before the second half of the year, says Wiggin.(Conditions)Copyright Dagens Næringsliv AS and/or our suppliers. We would like you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.

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Dalila Awolowo

Dalila Awolowo

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