Oil rises above $81 after OPEC+ adheres to current production policy
Oil jumped to a three-year high on Monday after OPEC+ confirmed it would stick to current production policy as demand for oil products resurfaced, despite pressure from some countries for a larger production increase.
The producer group's decision to continue to gradually increase oil production as determined before has driven prices up sharply, putting an inflationary pressure on consumer countries that the economic recovery might get derailed.
OPEC+ has faced pressure from some countries to supply more products to the market as demand in some parts of the world recovers faster than expected.
In July, OPEC+ agreed to increase production by 400,000 barrels per day (bpd) each month until at least April 2022, and to phase out 5.8 million barrels of current production cuts.
Brent crude rose $1.98, or 2.5%, to $81.26 a barrel. It rose 1.5% last week for the fourth consecutive weekly gain, returning to its highest levels last seen in 2018.
West Texas Intermediate (WTI) oil rose $1.74, or 2.3%, to $77.62 a barrel after gains over the past six weeks, hitting its highest level since 2014.
Considering the demand performance and the outcome of the OPEC meeting, the general perception of crude oil is on the rise.
Demand for coal and natural gas has surpassed pre-COVID-19 highs, with oil following closely, according to the International Energy Agency energy watchdog. Three-quarters of global energy demand is still met by fossil fuels, while less than one-fifth comes from non-nuclear renewable energy sources.
By the way, the rally in oil prices was also fueled by an even greater rise in gas prices, which rose 300% and encouraged a shift to fuel oil and other crude products for electricity generation and other industrial needs.
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