October 08, 2021
SURGING PRICE, NOT SUPPLY – The price of an OPEC barrel has risen above $80; this is the first time the price has topped $80 since October 2018, exactly three years ago. Prices are rising and expected to continue rising as demand for oil is recovering quickly but investment in new oil production is low and OPEC decided this month not to boost output beyond current plans. Major oil firms are not investing much in new production facilities as most of them project oil demand to peak in the next few decades. But in the short term, demand is rising as the world emerges from the coronavirus crisis. Also, in the short term, US production from the Gulf of Mexico, almost totally shut down by Hurricane Ida, has been very slow to recover. Iran has urged the Americans to lift sanctions on Iranian oil sales so it can fill global demand.
