Highest oil market prices for seven years amid multiple challenges

Highest oil market prices for seven years amid multiple challenges

Last week, oil prices continued their early-year surge, reaching their highest levels for more than seven years, mainly due to easing worries about the omicron variant, easing monetary policies in main-consuming countries, as well as tight oil supply amid growing geopolitical tensions and the inability of some OPEC+ countries to increase production to the agreed levels.

Last Monday, the People’s Bank of China for the first time in several years lowered the interest rate of its medium-term loans by 10 basis points and hinted at the possibility of further easing in its monetary policy. China is one of the largest importers of oil, so the improvement in the country’s economic prospects due to the softening of its monetary policy was perceived by the market as a factor of supporting energy demand.

On the geopolitical side, despite the calming of tensions in Kazakhstan, and its oil production being restored, the situation in several other oil-producing countries has worsened. In the middle of the past week, oil storage facilities in Abu Dhabi were attacked by drones fired by Yemen’s Houthi rebels. These incidents always cause a reassessment of the risks associated with oil supplies from the region. However, the impact on the market may