Oil price surge hit almost a two-year high on Friday. OPEC and its allies said on Tuesday that they would comply with agreed supply restrictions. In addition, Thursday’s weekly supply report showed that U.S. crude oil inventories fell more than expected last week.
As of 8:12 am GMT, Brent crude oil rose 33 cents, or 0.5%, to US$71.64 per barrel. It hit an intraday high of $71.99 on Thursday, the highest level since May 2019.
U.S. West Texas Intermediate crude oil rose 22 cents, or 0.3%, to US$69.03.
The summer and the reopening of the global economy will benefit the demand in the second half of the year.
This week, Brent crude oil should rise by more than 2.8%, and U.S. crude oil should rise by 4%.
The slowdown in negotiations between the U.S. and Iran on the Tehran nuclear program has lowered market expectations of a rapid increase in Iran’s oil supply. However, it has also boosted oil prices this week.
The focus later on Friday will be the U.S. employment data for May. The general forecast of non-agricultural employment announced that about 650,000 jobs would be added in May.
The Reasons for Increase in The Oil Price
The increase in demand in the U.S. and other countries, also the rapid development of Covid-19 vaccination boosted the price.
The slowdown in vaccination promotion and high infection rates in Brazil and India hit the high-growth oil market.
India, the second-most populous country in the world, vaccinated only 4.7% of the adult population. Currently, it is suffering from the second wave of infections.
With the injection of stimulus measures inspired by the pandemic, economists expect global economic growth to continue faster. As a result, energy demand will also grow faster. In addition, the future of oil is changing. The energy efficiency improves, countries are shifting to renewable energy. By 2050, economists predict that these reasons will reduce energy demand by 8%, compared to the current level. This number is interesting as, by 2050, the global economy should become twice as large as it is now.