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Gasoline more and more expensive: oil prices go through the roof

Gasoline more and more expensive
Oil prices are through the roof

Oil is more expensive than it has been in seven years. The price for the North Sea variety Brent has risen by around twelve percent since the beginning of the year. An end to the rally is not in sight.

Oil prices continue their recent rally. The price for a barrel (159 liters) of North Sea Brent rose to more than 87 US dollars and thus to its highest level since 2014. The American Texas Intermediate (WTI) variety also continued to rise in price.

Crude Oil (Brent) 87.29

Oil prices have been on a soar for some time. In the first few weeks of this year alone, the Brent price rose by around twelve percent after the price had risen by around half last year. Since the low in the Corona crash in spring 2020, the increase has totaled almost 450 percent.

There are several reasons for the increase. On the one hand, the global economy is recovering from the effects of the corona pandemic. On the other hand, geopolitical tensions are driving prices.

At the height of the Corona crisis, the price of oil had fallen to record lows in 2020 due to a lack of demand. The price for the North Sea variety Brent was at times $16 per barrel, while that of WTI was even negative. Since then it has risen sharply again. At the end of September 2021, it climbed back above the $80 per barrel mark.

There is also hope that more and more countries will open up again and people will travel more because studies show that the omicron variant of the coronavirus is more contagious but the disease is weaker. Kerosene prices have already risen sharply.

Attack in Abu Dhabi

The Russian troop deployment on the border with Ukraine is also contributing to higher oil prices. An escalation can lead to supply bottlenecks. The recent increase is also attributed to an escalation in the Yemen conflict. Houthi rebels from the country had claimed responsibility for an attack in Abu Dhabi. Three people were killed when a fuel tank exploded. Civilians and foreign companies in the United Arab Emirates were then urged to avoid strategic infrastructure assets. As a result, concerns grew on the markets about the security of oil supplies from the Gulf region, which is rich in raw materials.

There are also indications that the Organization of the Petroleum Exporting Countries (OPEC) and its partners, such as Russia, are having difficulty producing the agreed 400,000 barrels of oil per day, said Oanda analyst Craig Erlam. Opec+ will miss this goal, for example because the countries did not invest enough in production during the Corona crisis. “That should continue to support the price of oil and the talk of triple-digit prices.” The investment bank Goldman Sachs, for example, has predicted a steep rise – the price of oil could therefore break the $100 a barrel mark in the coming year.

In Germany, the high oil price is meanwhile causing the price of diesel to reach a new record high. According to ADAC, a liter of diesel at the gas station cost 1.586 euros last week, more than ever before. The price of petrol rose to an average of 1.655 euros per liter nationwide. The high energy prices are a major reason why inflation is so high in the euro zone and in Germany.

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