Ever since the pandemic hit the entire world, the oil prices throughout the globe had taken a plunge. In April of 2020, Oil prices took the worst plunge of the entire 21st century and went into negatives. Now that the pandemic’s impact on the entire world has started fading, things are getting back to normal all around the world.
As per the recent updates, the prices of oil have hit their highest level for almost a year. There has been a constant gain in oil prices since Friday (January 8, 2021). One of the main factors behind the oil price gains is Saudi Arabia’s pledge to cut strong and output gains in major equity markets.
As per the recent reports, the price of West Texas Intermediate Crude future (WTI) gained an increase of $1.41 or 2.8 percent. This has brought the price of the West Texas Intermediate Crude future to $52.24 per barrel. On the other hand, the price of Brent Crude has climbed by 94 cents or 1.8 percent. After the gain, the new price of Brent Crude is $55.35 per barrel.
These are the highest prices for the crudes that they have managed to hit since February of 2020. It has been reported that both the crudes have been gaining constant gains for weeks now. Ever since the lockdown liftoffs, the crudes have been experiencing a 6% gain per week.
Due to the COVID-19 situation, the oil prices have been showing very low gains. Due to this, the oil price markets were losing a lot of investors and interest. However, Saudi Arabia pledging to cut the production outputs is going to have a huge impact on the oil price markets.
According to sources, Saudi Arabia will voluntarily cut the production output of 1 million barrels per day (BPD). This will help create balance in the oil markets and with the stability, investments will start flowing into the oil markets.
As per the deal, Saudi Arabia will be proceeding with the production cuts of 1 million barrels per day for two months straight. In the deal, the months that Saudi Arabia has pledged the cutting of daily productions are February of 2021 and March of 2021. According to the deal, producers, as well as the OPEC, will be putting a hold on the production of oil according to the plan.
However, the analysts are predicting that if the pandemic still manages to cause constraints, then the oil prices would still experience a correction in the coming months, despite the efforts made.
As per the analysts, the oil prices will not be able to go back to their prime until the COVID-19 situation is completely brought under control.