Both West Texas Intermediate (WTI) and Brent crude futures ripped higher yesterday after OPEC+ said it would stick to its current output policy, benefitting from the rebound in energy demand globally. The decision flies in the face of calls from around the world to pump more oil, as governments fear energy price inflation could derail any economic recovery. After years of hearing the ongoing global calls from all quarters to stop new investments in oil companies and producers along with being side-lined in the rush to cut emissions by large industrial economies, it's hardly surprising they are not ready to play ball. The way OPEC sees it, higher oil prices are essential to continued investment, along with reminding the world that it still needs them.
As we have seen of late, it’s not only oil that is in demand, with both natural gas and coal demand now exceeding pre-Covid levels pushing prices of both to record levels. Nearly three-quarters of global energy needs are still met by fossil fuels, with less than a fifth by non-nuclear renewables.
The US benchmark WTI soared 3 per cent after the meeting to more than $78 a barrel for the first time in 7 years, whilst Brent crude jumped to $82 a barrel for the first time since 2018. At time of writing WTI was trading just below $78 with Brent at $81.8.
The White House press secretary, Jen Psaki, said that US had reached out to OPEC about a ‘a compromise solution to allow those proposed production increases to move forward’ adding that ‘We’re going to use every tool at our disposal even as we’re not a member of OPEC to ensure we can keep gas prices down for the American public’. She also confirmed that the White House national security adviser, Jake Sullivan, had raised the issue of oil prices with Saudi officials during a visit to the kingdom last week. At the moment those pleas are falling on deaf ears.