The international benchmark Brent crude oil prices extended gains on Monday after Saudi Arabia said that OPEC+ producers should maintain its cautious approach in managing supplies as pandemic-related risks persist. Brent gained 0.3% to more than $85 per barrel and was on track to its seven consecutive weekly gains. Meanwhile, US WTI crude prices hit their highest since 2014.
Global oil prices have more than doubled in the past year, thanks to the global economic rebound from the pandemic slump. OPEC+ continues to restrain supply despite the surging demand, contributing to the rally in prices. At the same time, soaring gas prices prompted many end-users to switch to oil products, boosting demand for crude oil. Saudi Arabia Energy Minister Prince Abdulaziz estimated extra demand of 500,000-600,000 bpd if the Northern Hemisphere’s winter is colder than usual.
OPEC+ is raising output by 400,000 bpd each month, but it is not enough to prevent the drawdown in global oil inventories. Oil prices are expected to rise further through the end of the year. Goldman Sachs expects Brent to hit $90 per barrel by the end of 2021 and close to $85 per barrel for the next several years.
