Oil prices in global markets are witnessing a significant rise and a tangible boom that exceeded the ceiling of 80 dollars per barrel, and there are expectations that these prices will continue during the remainder of 2021 and rise to 90 dollars per barrel during 2022.
Oil prices rose significantly yesterday, despite the announcement of a coordinated withdrawal between the United States and other countries of strategic oil reserves to contain the rise in prices globally, which negatively affected consumers in many countries of the world. This rise in oil prices comes as a result of fears of a shortage of coal and gas in China India and Europe prompted a shift to diesel and fuel oil for power generation.
In a step to contain this significant rise in prices, US President Joe Biden announced yesterday that 50 million barrels of strategic oil reserves would be pumped into the American market, the largest amount ever decided to be used. In his speech after the decision was taken, Biden said that this measure would not reduce prices overnight. But it will make a difference, while observers see that he is seeking from this step to revive his popularity, which has declined greatly among Americans in recent weeks.
It appears from today’s trading that the oil markets did not react to the US move, as prices rose, as US West Texas Intermediate crude futures were traded at $78.91 per barrel, an increase of 0.50 percent over the previous settlement price, while Brent crude futures were traded at $82.64 per barrel. An increase of 0.40 percent from the previous closing price, according to Bloomberg data.
The rise in prices at US stations that consume large quantities of gasoline poses a major political dilemma for President Biden, who has long repeated that his main political goal is to relieve the living burdens of the disaffected middle class due to globalization and the Covid-19 epidemic.
Biden's actions drew criticism from domestic circles, as prominent Republican Senator Lindsey Graham denounced in a statement what he described as "the misuse of these emergency reserves," accusing Biden of being behind the price hike by slowing investment in fossil fuels in the United States. Energy US Senator John Barrasso that Biden's policies are responsible for the need to take advantage of the strategic reserve.
Experts also rule out that the move will push oil prices in the markets down, and they say that the measure is temporary, expecting that, contrary to the goal, it will lead to a noticeable rise in prices.
Globally, India, Japan, South Korea and Britain joined the American initiative yesterday, while China announced today, through Chinese Foreign Ministry spokesman Zhao Lijian, his country's joining the initiative, and said that China, given its current needs and conditions, will use its natural reserves of crude oil and will take other necessary measures in order to preserve market stability.
On the other hand, according to sources, some of the OPEC Plus countries are not satisfied with the consuming countries’ resort to strategic reserves that are supposed to be used in emergency situations in order to reduce prices in global markets. The OPEC Plus countries are scheduled to hold a meeting next week to discuss a plan to increase production by 400 thousand barrels per day in next December.