Oil hits multi-year highs on OPEC’s plan to gradually increase output

2 min read | October 06, 2021 01:56 PM AEDT | By Arpit Verma

Oil hits multi-year highs on OPEC’s plan to gradually increase output — Image source: Rising oil prices | Source: © Krisdog | Megapixl.com

Undersupplied market

The investors got the smell that the market is going to be undersupplied in the coming months amid surging demand for energy and tight supplies. The demand for energy across the globe is rising as the economies have recovered from the lows of pandemics.

Oil prices have already gained more than 50% in 2021, adding to inflationary pressure that countries like the US and India are concerned that skyrocketing prices will derail their recovery from pandemics.

Adding to that record-high prices of gasoline have also encouraged various power plants and industries to use crude oil in place of gasoline, putting pressure on the demand side and fuelling prices.

OPEC

OPEC | Source: © Gumpapa | Megapixl.com

The Joint Technical Committee of OPEC+ in September said that it is expecting a supply deficit of 1.1 million bpd in 2021 which could turn into a 1.4 million bpd surplus next year.

Bottom Line

Crude oil prices surged to multi-year highs on the back of strong demand and the plan of OPEC and its allies to gradually increase the production.

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