Meanwhile, some traders think Brent will soar to $200 per barrel: File Image/Pixabay
Concerns over the impending global energy crunch, exacerbated by reports that China ordered its top energy companies to procure energy supplies at all costs, contributed to oil on Thursday closing the month almost 10 percent higher.
West Texas Intermediate rose 20 cents to settle at $75.03 per barrel, while Brent for November settlement fell 12 cents to $78.52 per barrel (the more active December contract gained 22 cents to settle at $78.31)
Some analysts (including Citigroup Inc.) think demand will soon exceed supply by over 1 million barrels per day (bpd), with the switch from gas to oil in Europe and other regions due to high power prices exacerbating the situation.
Helima Croft, RBC Capital Markets
OPEC will come under increasingly intense pressure from Washington to increase production
Also noted by insiders was the reduced chance of millions of barrels of Iran oil returning to the global market the longer the Islamic republic delays a resumption of nuclear talks with the U.S.
As such, Bank of America Corp. this week underlined an earlier trading call that crude could top $100 per barrel this winter, and Brent $200 calls for December 2022 traded 1,300 times on Wednesday.
While the higher oil prices are sounding alarms across the globe, in Saudi Arabia at least they translate into a chance to narrow the kingdom's budget deficit to 1.6 percent of economic output: the finance ministry stated in a preliminary budget released Thursday that revenue is expected to reach 903 billion riyals in 2022, higher than a forecast last year of 864 billion riyals.
However, it's unclear whether the energy crunch driving prices will actually blossom full force: speculation is increasing that next week's meeting of the Organization of the Petroleum Exporting Countries (OPEC) will result in the cartel raising production more than the previously announced hike of 400,000 bpd.
Helima Croft, global head of commodity strategy at RBC Capital Markets, explained, "With oil prices at multi-year highs, we think that OPEC will come under increasingly intense pressure from Washington to increase production."