After a sharp decline, Brent oil's listing has now begun a recovery. Will OPEC back up its decision to stick to production quotas? The industry also emphasizes again the major role they have in the global energy supply.
The quotation for Brent oil is on the rise again. On Friday, December 3, the price closed at $70,14 per barrel, before rising in the first half of the week to $75,92 per barrel on Wednesday, December 8. The advance has halted there for the time being. On Friday, December 10, the price will be $75,19 per barrel.
Two causes
According to analysts, there are two reasons for the recovery. The shock reaction to the omikron variant of the coronavirus was - in retrospect - exaggerated. With the news that a third vaccination is likely to provide good protection against the new variant, fears of the global economy coming to a standstill again subsided somewhat. The second reason does not directly have to do with oil, but with expectations for the exchange rate of the dollar. The US Bureau of Labor Statistics (or the Bureau of Labor Statistics in the United States) announced the inflation rate for the month of November on Friday, December 10.
Various analysts took higher inflation into account. The consequences of this were probably partly reflected in the price of Brent oil earlier this week. Inflation amounts to 6,8%. That is in line with what the market was expecting, although this is the highest level since June 1982 and the ninth month in a row above the 2% target of the US Central Bank (Federal Reserve).
The world runs on oil
This week the World Oil Congress was organized in the American city of Houston. There, leaders from the oil industry drew attention to the (at least for the time being) indispensable role of oil and gas in the energy supply. “The world revolves around our products,” said Chevron CEO Mike Wirth. With this he expressed the mood at the congress. Amin Nasser, the CEO of Saudi oil company Aramco, said: "I understand that it is difficult to publicly admit that oil and gas play a significant role in the energy transition. But facing this reality is much easier than energy insecurity, rampant inflation and social unrest as prices become unbearably high as climate plans are rolled out.”
The World Oil Congress is of course a celebration of, for and by the oil industry and these statements therefore fall into the category 'sermons for your own parish'. Yet there is some truth. Changing the energy system is possible, but be aware of the consequences of the choices that are made.
Diesel has become more expensive
The diesel price is keeping pace with the oil price this week. On Monday, December 6, the price was €114,96 per 100 liters. This quotation has risen to €117,85 per 100 liters on Friday, December 10. The Dutch diesel price is therefore among the top in Europe. In the discussion surrounding the new CAP (the Common Agricultural Policy), the earning capacity of the agricultural sector and a level playing field in the European Union, little attention is paid to the large differences in fuel costs. While this certainly takes a significant bite out of the balance, especially in the case of certain (intensive) crops - especially in a dry year when there is a lot of rain.
Equalizing the starting position within the European Union should be fairly easy. This is because a large part of the price for diesel consists of taxes and excise duties.