By: Economy Middle East
Oil prices rose on Monday, approaching the highest levels in more than seven years, which were recorded in the previous session.
Prominent oil-producing countries will meet next Wednesday to discuss increasing production.
They are likely to decide to continue the increase by 400,000 barrels per day in March-April.
There are signs of increasing global demand for crude, boosted by continuing tensions over the crisis in Ukraine.
Observers expect Brent crude to achieve its best performance in January in at least the last 30 years.
The global benchmark rose 1.1 percent, after six consecutive weekly gains, during which prices rose to the highest level since 2014.
The West Texas Intermediate advanced near $88 a barrel after rising by 2 percent last week.
The meeting of oil-producing countries
The rise in crude oil this month also comes with tightening global markets.
Banks and major oil companies said that oil may exceed $100 a barrel soon.
Notably, OPEC+ has not been able to fully meet the planned production increases in the last few months.
The OPEC+ alliance will meet next Wednesday to assess market conditions and discuss increasing production.
Many analysts expect the group to continue increasing production by 400,000 barrels per day in March.
This will be in line with its strategy to resume increasing production since May last year.
In 2021, significant production cuts were aimed at stopping the decline in prices when the pandemic began.
The International Energy Agency and global gas demand
Meanwhile, the International Energy Agency expected slight growth in global demand for natural gas during 2022.
This comes as the decline in use in Europe will limit the recovery of fuel consumption.
The Agency’s report for Q1 2022 stated that global consumption of natural gas rebounded by 4.6 percent in 2021, more than double the decline witnessed in 2020.
The economic recovery that followed the closings the previous year and the succession of severe weather events drove the growth in 2021.
The report said that 2021 ended with a record rise in spot prices in Europe and Asia, where natural gas supplies remained tight.
The direction of demand in the short term will depend on the weather during the rest of the hot season in the northern hemisphere.
The report stated that global gas demand will grow during 2022 by 0.9% annually after growing by 4.7% during 2021.
While consumption is expected to increase in Asia and the United States, it is expected to decline sharply in Europe.
Gas crisis and market reactions
The report demonstrated the severity of the energy crisis that struck Europe. This prompted electricity companies to switch to more polluting fuels such as coal to operate power plants.
Meanwhile, some industrial companies reduced their production due to high fuel prices.
The Agency expected a decline by 4.5 percent in gas demand in Europe during 2022, after growing by 5.5 percent in 2021.
It also expected the continued decline in electricity generation through natural gas in Europe in light of the shift towards renewable energy. and the use of cheaper coal.
The stage appears set for another oil-expensive year, which coincides with an expensive year overall.
As central banks begin to tighten monetary policies in response to rising inflation, a $90 a barrel for Brent crude may be just the start.
