Oil has hit a new three-and-a-half-year peak, and other commodity prices – notably nickel and aluminium – moved sharply higher as Donald Trump’s sanctions and the continuing conflict in Syria fuelled fears of supply shortages.
Brent crude rose 1.7% to $74.74 (£52.67) a barrel on Thursday, the highest level since November 2014 when oil group Opec began increasing production to protect its market share, a move that subsequently led to a supply glut and a price slump to $27 a barrel just over a year later. More recently Opec had agreed with Russia, another major supplier, to cap output and protect prices, even though growing production from US shale companies threatened to undermine this strategy.
However a surprise drop in US oil inventories this week, along with concerns about Middle Eastern supply following the military strikes on Syria by the US, the UK and France, have kept crude prices buoyant.
Meanwhile, ahead of an Opec meeting on Friday, Reuters reported that Saudi Arabia wanted to see prices as high as $100 a barrel. Joshua Mahony, market analyst at IG, said: “Friday sees a host of energy ministers from some of the most influential oil producing nations meet in the Saudi city of Jeddah, heightening anticipation of what could be yet another production freeze/cut extension in the offing.”
Lee Wild, head of equity strategy at Interactive Investor, said: “Despite the influence of US shale, Saudi Arabia still calls the shots on global oil markets, and it’s increasingly obvious the Saudis are comfortable with oil at $80 or more. Add a drop in weekly US oil reserves to the mix and the only way for crude prices is up. Saudi bullishness should be no surprise given it must somehow bankroll Crown Prince Mohammed bin Salman’s expensive reforms and modernisation at home.”
For more read the full of article at The Guardian
