Oil prices have been rising, with Brent nearing $80 and WTI Crude exceeding $75 per barrel as global oil and energy markets continue to tighten. Oil demand is recovering from the Delta variant faster than expected, but supply is not catching up fast enough, analysts say.
Goldman Sachs, for example, said that the deficit in the oil market is now higher than previously expected. The investment bank raised on Sunday its end-2021 oil price forecast to $90 a barrel Brent from $80 per barrel expected earlier, due to robust demand recovery and weaker supply response from OPEC+ and non-OPEC+ producers, some of which, like the U.S., were hit by supply disruptions in the wake of Hurricane Ida.
The hurricane has shut in more than 30 million barrels of oil since it made landfall at the end of August, prompting inventory draws in the United States that have underpinned oil prices in recent days.
In addition, surging natural gas prices globally amid decade-low inventory levels in Europe and strong Asian LNG demand ahead of the winter are forcing utilities to run more oil- and coal-fired electricity generation. Increased use of oil in the winter is set to further boost demand for crude alongside the faster-than-expected recovery from the Delta-led slump in consumption in some areas in Asia in July and August.
As a result of rising crude prices, in India, prices of petrol were hiked by oil marketing companies after more than three weeks while diesel price was increased for the fourth consecutive day. Petrol in India’s capital costs Rs 101.39 per litre, while diesel is retailing at Rs 89.57 per litre. Mumbai’s petrol cost is still the highest across metro cities, standing at a staggering Rs 107.47 per litre. Diesel in the country’s financial capital costs Rs 97.21 per litre. The divergence in prices between Delhi and Mumbai is due to various local VAT factors in different cities.