US oil prices have hit their highest level since November 2014 as a hearty economic recovery from COVID-19 crashes against a lack of truck and port workers and Hurricane Ida's damage to oil infrastructure.
West Texas Intermediate or WTI, one of the leading global benchmarks of oil prices, rose to $78.03 per barrel on Monday, a price that hasn't been seen in seven years.
OPEC+, a global cartel of the world's top oil-exporting nations, is set to meet via teleconference today, but they're unlikely to raise oil production to meet current demand because they're unsure of the trajectory of COVID-19 in countries like the United States, analysts say.
In July, the group agreed to increase output by 400,000 barrels a day every month beginning in August after long negotiations.
'It's going to take oil prices sustaining above $80 a barrel for a period of time or pushing sharply higher,' for OPEC to consider producing more oil, Richard Bronze, head of geopolitics at Energy Aspects, told the New York Times.
US oil prices have risen due to Hurricane Ida destruction, supply chain issues driven by less workers and increased demand as the economy recovers from COVID-19 lockdowns
OPEC, a cartel of the world's top oil producing nations, is unlikely to raise output even more during a meeting today. They already agreed to an increase of 400,000 barrels a day in July
West Texas Intermediate, a global benchmark for oil prices, rose to a seven-year high Monday
Last month, the US Energy Information Administration lowered its estimate of US crude oil production in August by 200,000 barrels a day as a result of Hurricane Ida, which closed or slowed down at least nine refineries, the agency said.
The agency also said it expected refineries to average 713,000 barrels a day less in September than they would have without the disruptions.
The surge in oil prices is also partly driven by concerns about running out of natural gas, which is used to generate electric power. The US is a major gas exporter and has been benefitting from that fear, but natural gas production was also slowed down by Hurricane Ida.
A shortage of port workers and truck drivers is making it hard to deliver oil and other goods to consumers, driving demand up.
'We've had supply chain issues really now for the past year and a half. They've afflicted many commodities,' Stephen Roach, the former Morgan Stanley Asia chairman, told CNBC.
Many large, multinational corporations are suffering from a supply chain crisis that's causing shipping delays and shortages of goods. Among them are Costco, FedEx, Walmart and Home Depot.
The US expected refineries to average 713K barrels less per day in September due
