The low stocks, disappointing production, the fact that little investment is being made and geopolitical tensions. They are ingredients for a dangerous cocktail on the oil market. It creates uncertainty among traders and producers and that uncertainty is factored into the price.
The price for Brent oil fell by more than $24 to $0,80 per barrel on Monday, January 87,06. In the following days the price found its way up. On Friday, January 28, the psychological barrier of $90 per barrel was broken and Brent oil is quoted at $90,26 per barrel. That is the highest level since 2014.
There are several reasons for the increase. Many analysts see the relatively small inventories as a reason for the price increase. The US Energy Information Administration has announced that the stock of crude oil and oil distillates is 1,78 billion barrels. That is the smallest stock since 2014.
The sector has (not unexpectedly) criticized the greening plans of the United States and the European Union. One of Biden's first acts was to cancel the Keystone pipeline, which transports oil from the tar sands in Canada to the United States. Soon after, a ban on drilling and drilling was imposed fracking on federal lands in Alaska. Critics report that the United States does invest in the 'old' energy, but without first developing the alternatives. An argument used to illustrate that statement is: look at the ratio of combustion engine or electric cars on American roads.
Dependent
The European Union also has strong ambitions for greening, but with the difference that there are relatively few fossil fuels compared to the United States. Here it is not the lack of investment that causes problems. Closing coal and nuclear power stations causes the biggest problems. The result is that both the European Union and the United States are becoming more dependent on other players.
Various OPEC+ members are now having difficulty filling their production quotas. Analysts expect OPEC+ to stick to its previously set strategy of increasing production by 400.000 barrels per day at next week's meeting. The question is whether that is feasible, especially now that geopolitical relations are on edge. The security of supply in countries with likely excess capacity, such as Russia and Kazakhstan, is at risk.
Market developments do not ignore the diesel market. A price of more than €130 per 100 liters was already set last week. On Tuesday, January 25, the price fell to the lowest point of the week, at €128,39. Now the price has skyrocketed and diesel comes to €132,05 per 100 liters. That is the highest price ever. And to think that Brent oil is not yet two-thirds of its all-time high, $147,50 per barrel in 2008.