The so-called scarcity premium incorporated in the structure of Brent crude oil futures has climbed to its highest since 2013 this week. The increase came as market participants expected the current supply tightness to push prices toward $100 per barrel. The premium of the Brent crude contract to the December 2022 price came in at $9.50 per barrel on Tuesday after hitting an eight-year high of $9.87 per barrel on Monday.
Brent’s outright price has risen by over 60% since the beginning of the year, thanks to a widespread energy crunch as demand increased amid the economic recovery from the COVID-19 pandemic. At the same time, OPEC+ producers decided to stick to their plan to increase supply gradually. Surging natural gas also prompted a switch from gas to oil products for power generation, especially in Asia. Brent settled at $86.70 per barrel on Monday, just 4 cents lower than its October 2018 high.
