The Real Reason Oil Prices Aren’t At $80 – MENAFN.COM

mena oil reason real prices
Gulf
  • Date: 07/22/2021
  • Source: MENAFN
  • Sector: Oil & Gas
  • Country: Gulf

The Real Reason Oil Prices Aren’t At $80 – MENAFN.COM

The UAE's awarding last week of a slew of huge drilling contracts aimed at increasing its crude oil output capacity from around 4 million barrels per day (bpd) to 5 million bpd underlines that the principal market risk from an oil trader's perspective is still skewed towards further supply against a backdrop of an uneven bounce back in demand following the height of the global COVID-19 crisis in 2020. In the short- and medium-term, significant supply increases are likely to come from ongoing failures in the OPEC decision and implementation structure, and in the longer term from a potential flood of new crude from Iran in the official oil markets and increases from non-OPEC crude producers. This trader-centric view is the basic reason that, despite the huge recent buying in the crude oil market by some leading investment banks and their fund manager clients (and their frantic bidding of oil on dips) with a view to hitting the much-vaunted US$80 per barrel point, crude has failed to meaningfully threaten that level or the once-steady US$100 per barrel price that prevailed for years before the Saudis launched the 2014-2016 Oil Price War. This inability to threaten these key price levels is