Global crude oil prices surged Friday, continuing their steady approach toward $100 per barrel, as a top energy group projected greater demand through 2022.
The West Texas Intermediate (WTI) crude oil index, which measures U.S. prices, increased more than 1.89% to $91.73 per barrel while the European Brent Crude index ticked up nearly 1.71%, hitting $92.94 per barrel as of Friday afternoon. Both indices inched closer to their highest price in multiple years, according to data tracked by Business Insider.
The International Energy Agency (IEA) pointed to the decision earlier this month by the Organization of the Petroleum Exporting Countries and Russia (OPEC+) to stick by its low output plan despite rising demand fueled by the global economic recovery.
“Chronic underperformance by OPEC+ in meeting its output targets and rising geopolitical tensions have propelled oil prices higher,” the IEA said Friday. “Benchmark crude prices rose by more than 15% in January to cross the $90/bbl threshold for the first time in more than seven years.”
“Global oil stocks at multi-year lows and dwindling OPEC+ spare capacity have left the market with only a small cushion,” the Paris-based group added.
The powerful Middle Eastern oil cartel has effectively removed 300 million barrels of oil, or 800,000 barrels per day, from the market since January 2021, according to the IEA. But worldwide oil demand is expected to increase by 3.2 million barrels per day to 100.6 million barrels per day on a post-pandemic “ease.”
Such an oil demand increase would mark an all-time record for global consumption, Reuters reported.
“If the persistent gap between OPEC+ output and its target levels continues, supply tensions will rise, increasing the likelihood of more volatility and upward pressure on prices,” the IEA concluded. “But these risks, which have broad economic implications, could be reduced if producers in the Middle East with spare capacity were to compensate for those running out.”
The energy group also noted that the release of government oil reserves led by President Joe Biden had a minimal effect on global supply. Industry stocks have declined by 355 million barrels of oil per day while the U.S. coordinated a release of just 50 million barrels in November 2021.
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