Crude oil prices remain near record levels as tension mounts over Iran’s nuclear programme and supply concerns in Nigeria and Iraq continue. And the International Energy Agency has said OPEC needs to pump more oil this year than previously estimated. That is due to rising demand and shortfalls from other producers such as Russia.
Price pressures come from geopolitical events like Iran, lower production from such things as refineries being overhauled and hurricane damage in the US. In addition speculators, faced with low global interest rates, are chasing returns in all types of commodities, including oil. And there is ever rising demand particularly from China.
Factor in all that and there is no sign of the oil rally slowing. Some energy industry analysts are talking about the price eventually climbing to one hundred dollars a barrel.
With the price adjusted to take inflation into account, the cost of oil has been on a roller coaster in the last half century. It is now higher than it was during the Arab oil embargo of 1973-74, but lower than the price it hit when the first major fighting started during the in Iran-Iraq War in 1980. It plummeted during the 1998 Asian economic crisis.
At the New York Mercantile Exchange, trader Ira Eckstein said, for the moment, global economies seem to be unhurt by the high prices: “We’re still growing at a very robust rate, and last year’s big upswing in oil didn’t hurt the world economies, so we’re still using a lot of oil. The only real factor that could take this market down is if the world economies slow down, which they’re not, they’re not giving any signs of slowing down.”