Fears of a return of inflation have gripped central banks around the world, which expressed their caution against explicitly declaring the end of the current wave of inflation, especially with the emergence of indications of a possible significant rise in global oil prices, as the price of a barrel of Brent exceeded $95 this week, which is the highest level since. November 2022, while prices have not reached the $100 barrier since the end of August 2022.
Oil and its derivatives constitute a share of the consumer basket around the world, with its entry into sectors such as transportation and various industries, most notably food, which means that the return of high inflation may be close, by the last quarter of 2023, or the first quarter of 2024.
** Present signs
On September 5, Saudi Arabia and Russia announced the extension of a voluntary reduction in their oil production, extending until the end of 2023 instead of this September, by 500,000 barrels and 300,000 barrels per day, respectively. These two numbers do not include another mandatory reduction in which both Riyadh and Moscow participate, under the umbrella of the OPEC+ alliance, which began in November 2022 until the end of 2023, followed by another reduction that continues until the end of 2024.
These cuts pushed prices to rise above $90 a barrel at the beginning of this month, and above $95 at the beginning of this week, while research institutions began talking about levels of $100 by the last quarter of 2023.
Bloomberg Economics says in a report issued this week that its analysis assumes that most of the rise in oil prices stems from supply constraints. Added to this is an increase in demand with the approaching winter season.
At the same time, Mike Wirth, CEO of the American energy company Chevron, expects oil to exceed $100 per barrel soon, amid shrinking supplies.
Wirth said, in an interview with Bloomberg: “We are definitely moving in this direction… Supplies are shrinking, inventories are diminishing, and these things are happening gradually and you can see it… We are approaching $100.”
** Significant growth
Since the beginning of this month, Brent oil prices have risen by more than 12 percent, while they have risen by 22 percent since the beginning of this year, up from $77.8 per barrel.
This growth in prices coincides with the United States beginning to rebuild its stocks of oil and derivatives, as it withdrew about 200 million barrels of crude stocks from March 2022 until the first half of this year.
Washington needs to rebuild stocks, which means an increase in demand, amid signs that the Chinese economy is recovering, as Beijing is the largest importer of crude with a daily average exceeding 10 million barrels.
Oil demand is expected to reach a record level of 102.2 million barrels per day this year, an increase of 2 percent from last year, according to the International Energy Agency.
** Global diesel shortage crisis
Diesel prices have been witnessing successive increases for several months, amid a scarcity in refining and production, and with an approaching seasonal increase in demand for it for heating purposes. The demand for diesel usually rises in both Europe and the United States during the winter, as it is an alternative to natural gas for heating purposes, and an alternative to gas in any shortage in productive sectors.
This crisis has led to an increase in demand for light crude oil, which is best for diesel production. If the price of light crude oil exceeded the $100 level in a few hours, last Friday.
Moreover, the Russian government said on Thursday that it had temporarily banned gasoline and diesel exports to all countries except four former Soviet countries, with the decision taking effect immediately to achieve stability in the local market.
The government explained in a statement that “the temporary restrictions will help saturate the fuel market, which in turn will reduce prices for consumers.”
In a separate context, Saudi Crown Prince Mohammed bin Salman said on Wednesday that the OPEC+ alliance does not aim to reach a specific price for a barrel of crude oil, stressing that the goal is to achieve stability in the energy market.
Bin Salman also pointed out that “the decisions to reduce production adopted by the OPEC+ alliance mainly aim to achieve the greatest degree of stability in the energy market.”
2023-09-22 13:14:56
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