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Covid-19 Lockdowns Reopen Making Oil Prices Surge

As the global economy reopens from Covid-19 lockdowns, oil prices soared to their highest level in more than two years Monday, fueled by fresh evidence of rising demand. The U.S. benchmark, West Texas Intermediate crude oil, rose 71 cents to $71.62 a barrel, the highest since October 2018. With Brent crude being the worldwide benchmark, it rose 67 cents to $73.36 a barrel, its highest level since April 2019. On Friday, the International Energy Agency encouraged OPEC and its allies to accelerate output increases to pre-pandemic levels.

This month, the corporation stated that it would increase production by 5.8 million barrels per day, bringing output back to pre-Covid-19 levels. Phil Flynn, the senior market analyst at the Price Futures Group, said, “The United States is reopening and many people are going to start going back to work, increasing demand. There are expectations that we’re going to see the oil demand get back to pre-Covid-19 levels before the end of the year.”

Covid-19 Lockdowns Reopen Making Oil Prices SurgeOn Friday, the International Energy Agency encouraged OPEC and its allies to accelerate output increases to pre-pandemic levels. This month, the corporation stated that it would increase production by 5.8 million barrels per day, bringing output back to pre-Covid-19 levels.

Due to the demand devastation induced by Covid-19, the so-called OPEC+ group cut production by a record 9.7 million BPD in January 2020. OPEC+ has been suspicious of increasing output too rapidly because a nuclear deal with Iran would bring additional oil onto the market. However, the chances of an agreement are receding as the “Iranian election seems to suggest a hardliner could be the next Iranian president,” according to Flynn.

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