Prospect of global fuel shortages pushes oil price above $80 a barrel

The price of Brent crude has exceeded the US$80 per barrel mark for the first time in three years, as global markets grapple with the likelihood of widespread fuel shortfalls heading into the end of the year.

Brent – the international benchmark – increased as much as 0.8% to $80.19 a barrel during Asia trading earlier today, hitting a three-year high for the second consecutive day. The latest rise puts crude 55% higher year-to-date and comes against a backdrop of a broader rally in global energy markets.

A shortfall in global gas production, along with a concerted drive in China to cut down on pollution from heavy industry, is expected to push crude even higher in the coming months. Oil prices are also rising in China, with crude futures in Shanghai up 27% from late August.

Meanwhile, the UK is in the midst of a fuel supply crisis triggered in part by a shortage of haulage drivers. For the last five days, panic buying motorists have run petrol stations dry in all major cities across the country.

“We’re looking at not just the UK and Europe, but a potential global energy crisis coming into the winter,” said Robert Rennie, global head of market strategy at Westpac. He warned that with global energy demand rising as countries ease COVID-related travel restrictions, oil could face a worldwide shortage.

Goldman Sachs yesterday raised its forecast for year-end Brent crude prices to $90 per barrel from $80, based on rising global fuel demand and Hurricane Ida’s recent hit to oil production across the US.