After Surging to Record Highs, Crude Oil Shows a Much-Needed Ease
- Journalist: Harold Finch
Saudi Arabia and UAE have agreed together to boost the crude oil output by extending the overall supply of UAE in the global market. Under the compromise, the UAE's baseline crude output will be raised to 3.65 million barrels per day (bpd) after the current pact expires in April 2022. As its result, global crude oil prices declined effectively, which led Brent crude oil prices to reach USD 75.92 per barrel on 14th July 2021, which were earlier hovering around USD 77.5 per barrel on 13th of July 2021. Moreover, WTI Crude oil prices also slipped from USD 75.39 per barrel to USD 73.20 per barrel in this timeframe.
From the past several weeks, USA was demanding to increase the output from OPEC countries, as the country’s domestic consumption skyrocketed in early July tracing its strong recovery from the pandemic. While gasoline and diesel demand reached the pre-pandemic levels, there is also sharp demand rise for petroleum-derived products such as plastic, lubricants and other industrial products.
This huge spike in consumption by USA in July, was threatening the global availability of crude oil, which led to a continuous rise in fuel, and the prices of other petroleum derived commodities. The energy experts also argued that despite of low consumption by the aviation sector, prices of fuel have gone too far which could rise further in future when consumption of Jet Fuel would reach normalcy.
According to ChemAnalyst, this fall in crude oil prices will be effective for short term, as the major economies are still struggling with post pandemic complications and the global aviation sector is yet to attain normalcy. In addition, the further price deflection is also depending upon the decision of other OPEC countries, which will decide the overall global market dynamic of crude oil.