2023-10-11 14:51:15
WORLD – Oil prices increased on Monday October 9 by almost 4% due to concerns related to an escalation of the conflict in the Middle East. On the same day, OPEC warned that the global oil industry will need massive investments reaching $14 trillion by 2045. Without these capital flows, the market risks descending into “chaos.”
The price of a barrel of Brent crude oil, used by EU countries to produce gasoline, rose by 4% on Monday October 9 following the Hamas attack on Israel. This increase could result in an increase in fuel prices in the coming days.
Markets are concerned about the risk of an escalation of the conflict in the Middle East, which could extend to Iran, a key supporter of the Palestinian group Hamas involved in the attack last Saturday October 7 in Israel. This situation could further reduce the supply of crude oil, already limited in 2023 due to production restrictions imposed by OPEC, Saudi Arabia and Russia. Additionally, U.S. oil reserves are at historic lows, heightening concerns in the market.
Rising prices
With this recent rise, crude oil prices have reached summer levels. From July until the last week of September, the prices of WTI (West Texas Intermediate) and Brent constantly increased, exceeding $90. Currently, analysts are speculating on the possibility that the price of a barrel will reach the $100 mark.
European crude oil traded as high as $88.99 in the early hours of Sunday morning (October 8), up 5.23% from Friday’s close (October 6=, but later moderated its rising to $87.45 later in the day, reducing its gain to 3.2%. On Monday, October 9, the price of a barrel of Brent increased by almost 4%, falling just below the $88 mark. WTI, its American equivalent, followed a similar trend.
“The risk premium on oil is rising due to the prospect of a wider conflagration that could spread to neighboring oil-producing countries such as Iran and Saudi Arabia”explains energy analyst Saul Kavonic to the BBC. “If the conflict involves Iran, which has been accused of supporting Hamas attacks, up to 3% of the world’s oil supply is at risk.”he told the British public broadcaster.
Energy chaos
“What is clear is that the world will continue to need more energy in the decades to come”, warned the secretary general of the Organization of the Petroleum Exporting Countries (OPEC), Kuwaiti Haitham Al Ghais, in a report presented Monday in Riyadh. According to his words, the only way to cope with the increase in energy consumption is to invest massively in all energies.
In the case of the oil sector, Al Ghais warns that “Calls to stop investment in new oil projects are misguided and could lead to energy and economic chaos”. In this sense, the organization estimates that investment needs for the oil sector in general, between 2022 and 2045, are estimated at a cumulative total of 14,000 billion dollars (13,200 billion euros), or approximately 610 billion dollars per year on average (576.252 billion euros).
“If these investments do not materialize, this represents a considerable challenge and risk for market stability and energy security”warns OPEC.
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