By Adedapo Adesanya
Oil prices climbed to a three-year peak on Monday after the Organisation of the Petroleum Exporting Countries and allies (OPEC+) confirmed it would stick to its current output policy as demand for petroleum products rebounds across the world.
As a result, the price of the Brent rose by 2.5 per cent or $2.00 to sell at $81.28 per barrel, while the US West Texas Intermediate (WTI) moved up by 2.29 per cent or $1.74 to trade at $77.62 per barrel.
After its monthly meeting on Monday, OPEC+ said it would stick to an existing pact for a gradual increase in oil output, sending crude prices to three-year highs and adding to inflationary pressures that consuming nations fear will derail an economic recovery from the pandemic.
The 23-man group has faced calls for additional supplies from big consumers such as the United States and India after oil surged more than 50 per cent this year.
The President of the US, Mr Joe Biden, through a senior aide, met Saudi Crown Prince Mohammed bin Salman in Saudi Arabia on a range of issues last week, including while one of the world’s largest consumers and importer, India, has pushed for more supply.
OPEC+ reconfirmed the production adjustment plan that it previously agreed would see 400,000 barrels per day (bpd) added in November, the group said in a statement issued after online ministerial talks.
Also adding his voice, the co-chair of the alliance, Russian Deputy Prime Minister Alexander Novak said, “We will be monitoring the situation, as we know, demand usually falls in the fourth quarter, our plans on increasing (output) are even, we will be watching how the market will be balanced.”
OPEC+ decided in the middle of July that it would start returning 400,000 barrels per day to the market every month beginning in August until it unwinds all the 5.8 million barrels per day cuts. The group agreed to extend the existing deal from April 2020 through the end of December 2022.
The oil price rally has also been fuelled by an even bigger increase in gas prices across the world which have spiked by 300 per cent, prompting switching to fuel oil and other crude products to generate electricity and for other industrial needs.
