Oil prices are most likely to soar above $100 a barrel after the collapse of production negotiations between the group of oil-producing countries and OPEC +, as has been brought to light by the former US Secretary of Energy Dan Brouillette on Tuesday. Talking to CNBC, he said that oil prices have the potential to quickly climb to a sum of $100 a barrel, or even more, as the trend is indicating. He further added that there is, at the same time, a great possibility that prices will plummet.
Brent crude increases to its highest level since the fall of 2018 before falling back to $76.79 a barrel during the morning of the latest Tuesday. WTI crude, which is the reference price in the United States, rose 0.78% to reach a sum of $75.75 a barrel, indicating a three-year high. The prices significantly rose after talks between OPEC’s group of oil-producing countries and their allies were dramatically suspended.
The UAE is reportedly dissatisfied with the expected level of production increase or how the targets are getting measured, leading to a break with Saudi Arabia and Russia. However, there is good news, as Brouillette hinted by saying that there is the same possibility that prices will fall as a result of group members starting a price war by increasing production on their own.
Claiming his position, Brouillette said that there is no agreement on production, and in that case, if the countries tend to go out and manage their own production, there is a strong possibility of having a collapse in oil prices.
Oil prices plummeted when the pandemic hit in 2020 but have recently rebounded as economies reopened and OPEC + maintained production levels. The last time prices exceeded $100 a barrel was in the year 2014. Experts have mentioned that oil prices could normalize as soon as OPEC + members meet again to discuss the issue.
Dan Yergin, a senior oil expert and the vice-chairman of HIS Markit, said that the topping of oil prices to a rising sum of $100 per barrel would destroy the demand ratio. He also added that according to him, several countries will recognize that $100 barrel oil will not be in their interest. On today’s date, the oil prices continue to rise, and after the weekend of July 4, when about 43 million Americans traveled by road, the average cost of gasoline was 40% more expensive than the usual rate at which it was sold before.