Oil prices rise as Opec+ decides not to further increase production beyond current plans
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Combustion Industry News Editor
US oil prices have hit a seven-year high after Opec+ (i.e. including Russia) declined calls from US President Joe Biden to increase production. Opec+ will instead keep to its summer plan of gradually increasing production by 400,000 barrels per day each month, apparently slower than the increase in demand as much of the world’s economy works towards pre-pandemic levels. It is a remarkable turnaround for the West Texas Intermediate benchmark oil price, which at one point in 2020 was trading at negative prices as storage spaces became exhausted; as of early October this year, the price reached US$78/barrel, a level not seen since 2014. As the Financial Times notes, the situation is an awkward one for President Biden, as the call for increasing oil supply is in contrast to his goal of reducing domestic and international fossil fuel use, especially in the run up to the COP26 conference. It is proof that the energy transition will not at all be straight forward, and that oil is likely to play a vital role in the world energy sector for years to come, even if demand will eventually be curtailed by the rise of electric vehicles. White House press secretary Jen Psaki told reporters that the administration is “going to use every tool at our disposal even as we’re not a member of Opec to ensure we can keep gas prices down for the American public”. Investment bank Goldman Sachs has suggested that prices could hit US$90 this year.