The prices of hydrocarbons, in particular those of black gold, have recorded a meteoric rise since the start of the armed conflict between Russia and Ukraine. A report by the investment bank Goldman Sachs forecasts an increase in oil prices reaching 135 dollars per barrel by the end of the year.
According Golman Sachs, crude oil prices increase to balance supply and demand in the global market; and this, to reach 135 dollars per barrel during a period of one year, starting in early July.
Analysts explain this upward trend by the recovery of Chinese demand, following the lifting of restrictions linked to Covid-19; but also by the decline in Russian production which occurs on the fringes of a context marked by the Russian-Ukrainian armed conflict and the establishment of a European embargo on Kremlin oil.
According to Michael Hewson, analyst for CMC Markets, “the recovery in demand with the reopening of Beijing and Shanghai is helping to support prices”; which is far from good news about a possible drop in prices.
OPEC members and their allies had decided to increase their overall oil production next July; with the aim of restoring a global oil balance. However, analyst Tamas Varga believes that is unlikely to happen.
What keeps oil prices rising
According CNN Business, three-digit oil prices are not about to disappear; because since the start of the Russian-Ukrainian conflict, prices have not fallen below 117 dollars a barrel. The same source explains that three factors allow the maintenance of this inflation.
First, there is the European abandonment of Russian oil as well as the establishment of an embargo and a series of sanctions against Moscow. European Union (EU) countries are seeking new suppliers in an effort to suspend Russian oil imports.
Next, there is the question of insufficient alternatives in terms of the supply of oil; because Russia alone accounted for 14% of the world’s oil supply and Western sanctions against it have created a significant shortage in the market.
Finally, it turns out that global demand could drive up black gold prices; especially after the lifting of health restrictions linked to the Coronavirus in China. Indeed, the Covid-19 lockdown has stifled demand from the world’s largest oil-importing country.
New record for the Algerian Sahara Blend
It should be noted that faced with this particular economic context; oil prices are on the rise again. Yesterday, Tuesday, June 7, Algerian Sahara Blend registered a new high and gained 1.63% to reach 123.51 dollars per barrel.
The price of a barrel of Brent North Sea oil for August delivery rose 0.88% to $120.57 a barrel. For its part, US oil, West Texas Intermediate (WTI), gained 0.76% to settle at 119.41 dollars a barrel.
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