Oil Prices Continue to Climb to Multi-year Highs due to Supply Shortages

As a result of a global supply shortage and strong demand from the United States, oil prices climbed up to new multi-year highs on Tuesday.

By 12:14 p.m. EDT (1614 GMT), Brent futures were up 42 cents (0.5%) at $86.41 a barrel, while WTI crude was up 95 cents (1.1%) at $84.71. They are both now on track to close at their highest levels since October 2014.

In response to rising oil prices, OPEC+, which consists of members of the Organization of the Petroleum Exporting Countries (OPEC) as well as allies such as Russia, has increased monthly output by 400,000 barrels per day (bpd).

Goldman Sachs expects Brent to rise above its year-end forecast of $90 per barrel, while Larry Fink, CEO of BlackRock, predicted that oil would hit $100 in the near future.

With oil and gas prices at multi-year highs, shale producers in the United States are prepared to deliver the strongest earnings since the outbreak of the coronavirus pandemic. While China’s hot power and coal markets have cooled after government intervention, global energy prices remain high as the northern winter approaches.

“Forecasts for a colder November have energy traders bracing for a very tight market that will be met (with) unprecedented demand this winter,” said OANDA senior market analysts Edward Moya.