Oil climbed $85 a barrel after Saudi Arabia said that the Organization of Petroleum Exporting Countries, OPEC+ alliance should maintain its cautious approach to managing global crude supplies given the threat to demand still posed by the pandemic.
Global benchmark Brent was 0.2 per cent higher in early Asian trade following a run of seven consecutive weekly gains, the longest such streak since March.
Saudi Arabia Energy Minister Prince Abdulaziz bin Salman told Bloomberg Television at the weekend that producers shouldn’t take the rise in prices for granted as similar conservative stance was echoed by both Nigeria and Azerbaijan.
Oil has more than doubled over the past 12 months as the global economy rebounded from the dislocation caused by the coronavirus pandemic. While consumption has surged, the OPEC and its allies have been restrained in easing the draconian supply cuts they imposed in 2020 to salvage prices.
That’s helped to lift Brent to the highest level since 2018 as stockpiles draw and key timespreads balloon.
The gains in crude have been supported by a powerful rally in natural gas, which has boosted demand for oil products as a substitute. While Prince Abdulaziz said that consumption may increase 500,000-600,000 barrelsd day if the Northern Hemisphere’s winter is colder than normal and companies switch from gas to crude, he also cautioned that more barrels from OPEC+ would do little to curb costs of gas in Europe and Asia or gasoline in the U.S.
In a sign that the pandemic is far from vanquished, China has been dealing with a renewed COVID-19 outbreak caused by the delta variant from overseas. A wave of infections has spread to 11 provinces in the week from October 17, Mi Ffeng, spokesman for the commission, told a briefing.