Oil prices surge as Nigerian and Malaysian crude reach above $100 per barrel
London, UK – Oil prices have hit their highest level of 2023, with some grades of crude oil already trading above the $100 per barrel milestone. The outright price of Nigerian crude, Qua Iboe, surpassed $100 a barrel on Monday, according to data from the London Stock Exchange Group (LSEG). Additionally, Malaysian crude, Tapis, reached $101.30 last week, as reported by Bjarne Schieldrop, an analyst at Swedish bank SEB.
Investors and traders have been closely monitoring the oil-price rally, with a particular focus on the possibility of a supply deficit in the fourth quarter. This has been driven by extended supply cuts from Saudi Arabia and Russia, who are the largest producers in the OPEC+ group. Many other members of this group are also curbing their output.
“The overall situation is that Saudi Arabia and Russia are in solid control of the oil market,” Schieldrop commented, highlighting the influence of these two major producers.
Brent oil futures, a global benchmark, reached as high as $94.89 on Monday, and the related benchmark used for trading much of the world’s physical cargoes, known as dated Brent, stood just above $96 according to LSEG.
The prices of crudes such as Qua Iboe, which are priced against Brent, have already surpassed $100. This is because they are based on the price of dated Brent plus a cash differential or premium, currently assessed at around $4.25 a barrel by LSEG.
Schieldrop predicts that dated Brent is highly likely to move above $100, stating that it would only take some “noise” to push it beyond that threshold. Swiss bank UBS also anticipates Brent futures reaching triple digits.
“We expect Brent to trade in a range of $90-100 over the coming months, with a year-end target of $95,” said UBS analyst Giovanni Staunovo.
The increasing oil prices have implications for various sectors, including transportation, manufacturing, and consumer goods. Higher oil prices can lead to increased costs for businesses, potentially impacting inflation and economic growth. As a net importer of oil, the UK may experience the effects of rising oil prices in terms of higher fuel costs and potentially higher consumer prices.
The situation will continue to be closely monitored by experts and market participants, as they assess the potential impact on global markets and economies.
More detail via Yahoo! Finance here… ( Image via Yahoo! Finance )