Key Events Leading to Oil Price Surge

Oil prices reached their highest levels since mid-April after a series of significant events:

1. Attack on Russian oil export hub: Ukraine conducted a naval drone attack on Russia’s port of Novorossiysk, a crucial hub for Russian oil exports. This attack heightened concerns about potential disruptions in oil supply.
2. Extended production cuts by Saudi Arabia: The world’s top oil exporter, Saudi Arabia, announced an extension of its voluntary crude oil output cut of one million barrels per day until the end of September. This measure aimed to limit oil supply and support prices.
3. Production cuts by Russia: Russia, the second-largest oil exporter globally, also pledged to reduce oil exports by 300,000 million barrels per day in September.

Current Oil Price Levels

Brent futures, the global benchmark, traded slightly below the flatline at $86.17 per barrel, marking the highest price since April 14. U.S. West Texas Intermediate (WTI) futures dipped 0.1% to $82.74 per barrel but remained close to mid-April highs.

Expert Opinions on Future Oil Prices

Experts hold differing views regarding future oil prices:

• Positive outlook: Josh Young, chief investment officer at Bison Interests, believes that the decline in supplies will lead to much higher prices in the future.
• Volatility expected: Young anticipates significant price fluctuations in the coming years due to the imbalance between supply and demand.
• Cautiously optimistic: Ed Morse, the global head of commodity research at Citi, projects that Saudi Arabia and Russia will gradually increase their output after September. He estimates that oil prices will peak at $90 per barrel at most this quarter, citing moderate demand growth.