By Barani Krishnan
Investing.com – Oil prices broke well beyond $80 per barrel on Monday as bulls in the market cheered OPEC+’s decision to add only incrementally to its production despite the squeeze in global supplies and worsening inflation by the day.
Prior to Monday’s meeting of the 23-nation alliance of oil producers, there had been speculation that it could agree to adding more than the 400,000 barrels per day it had committed to until the end of April.
But after the video linkup among the 13-member Saudi-led Organization of the Petroleum Exporting Countries and a group of 10 other producers steered by Russia, the message was clear: It will be the same 400,000 bpd over the next six months, barring any change down the road.
There was no official statement on the matter. But a Saudi official told the Wall Street Journal that “the kingdom is comfortable with the current price range and feels it won’t weigh on demand for oil”.
No OPEC delegate directly addressed the White House or India, the world’s third largest oil importer, which had been clamoring for higher supplies to reduce oil prices and ramping inflation.
The agreement came as OPEC+ appears to be in full control of an oil market that just 18 months ago seemed to be floundering all over it amid demand destruction from the Covid-19.
From its first-ever negative pricing of $40 per barrel in April 2020, U.S. crude’s West Texas Intermediate benchmark settled Monday’s trade at $77.62 per barrel, up $1.74 on the day or 2.3%. Earlier in the session, it hit a seven-year high of $78.36. WTI has gained 60% this year alone.
London-traded Brent crude, the global benchmark for oil, finished Monday’s session at $81.26 per barrel, up $1.98 or 2.5%. Brent peaked at $81.98 during the session. It is up 57% for this year.
While oil prices seem to be on a different planet now compared to their depths during the pandemic, ironically some OPEC delegates said in private conversations with journalists that they were concerned about the same virus and its variants once again depressing prices.