Business News

Brent oil has reached its highest level since 2014, owing to a surge in the physical market.

Brent oil has risen to its highest level in seven years as physical markets in the world’s largest consuming region heat up, and Goldman Sachs Group Inc. has predicted that prices will soon reach $100 per barrel.

Futures in London reached $88.13 per barrel, a high not seen since October 2014. With concerns about the impact of omicron on-demand fading, traders are paying ever-increasing premiums to secure cargoes in Asia. This indicates that they believe the market is tight, which is fueling this year’s 13% rise in headline prices.

Goldman Sachs increased its Brent forecasts for 2022 and 2023, forecasting $100 oil in the third quarter. Robust fundamentals have reversed a price slump last year, keeping the market in a surprisingly large deficit, with the omicron variant having a much smaller impact on demand than the delta variant, according to the report.

“We’re seeing a boost from a tight market, and the physical market is rallying further from the current, strong refining margins,” Grayson Lim, senior crude market analyst at industry consultant FGE, said.

Crude has had a scorching start to the year, with outages at producers such as Libya adding to the bullishness caused by strong demand. There are positive signals coming from the oil complex, from diesel to jet fuel, which is soaring in Europe as air travel survives the omicron impact. OPEC is set to release its monthly report later Tuesday, providing a market snapshot.

The physical-market strength has been exacerbated by renewed tensions in the Persian Gulf, which is home to roughly 40% of the world’s seaborne oil.

Yemen’s Houthi fighters claimed responsibility for a drone strike on the United Arab Emirates, which resulted in an explosion and fire on the outskirts of Abu Dhabi. The country is OPEC’s third-largest producer.

“Market sentiment remains positive, and the attack on the UAE has only provided a further boost to prices,” said Warren Patterson, head of commodities strategy at ING Groep NV. “Supply disruptions combined with strong demand have resulted in the oil market being tighter than expected.”

About the author


Kathy Lewis

Kathy Lewis is an all-around geek who loves learning new stuff every day. With a background in computer science and a passion for writing, she loves writing for almost all the sections of Editorials99.

Add Comment

Click here to post a comment