LONDON. — Crude oil prices continue to climb despite attempts by oil producers to reassure the market about availability and the existence of enough spare capacity to offset oil lost as a result of US sanctions on Iran.
Brent crude has risen to almost 75 euros per barrel, the same level it reached in May 2008, on its way to a peak of 93 euros in July 2008.
Front-month futures have also hit 9,800 yen per barrel, the same as in October 2007, on their way to a peak of 15 300 yen in July 2008.
Prices in Indian rupees are already at the same level that they peaked in 2008 and on the way to the record set in 2013.
Only the strength of the dollar against other currencies is masking how high prices have become in oil-consuming countries outside the United States
Prices have already risen to a level that has contributed to a slowdown in economic growth and oil consumption in the past.
“Expensive energy is back at a bad time for the global economy,” the chief executive of the International Energy Agency has warned (“IEA boss urges oil producers to ease supply concerns”, Reuters, October 4).
“It is now high time for all the players, especially those key producers and oil exporters, to consider the situation and take the right steps to comfort the market,” he added.
The blame-shifting game is well underway, with the United States blaming OPEC, Russia faulting U.S. sanctions, and Saudi Arabia blaming speculators for escalating prices.
In reality, US sanctions, output restrictions by OPEC and its allies, strong consumption growth and position building among the hedge funds have all contributed to the price surge. – Reuters.