Crude Oil Hits $80 for the First Time in Three Years

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Crude oil prices have been rising over the past few days due to the energy crisis in Europe. (Image: pixabay / CC0 1.0)

On Sept. 28, the price of crude oil touched the $80 mark. This was the first time in three years that oil prices rose to this height. The price surge comes as global demand for fuel is surpassing the supply. Oil prices have been on a steady rise over the past few days due to Europe’s unraveling energy crisis. Experts project this trend to continue.

According to Goldman Sachs, the price of Brent crude can potentially hit the $90 per barrel mark by year-end. It warned that the profit growth of European companies will be weighed down by higher gas prices, rising input costs, and weaker growth. “When growth slows, it becomes harder for companies to pass on higher input costs, which is the main risk for net income margins,” the Wall Street firm stated.

Crude oil prices have risen by 55 percent this year despite the fact that demand has largely been dampened by COVID-19 outbreaks. Louise Dickson, a senior oil markets analyst at Rystad Energy, pointed out that the price dynamic has now shifted to supply rightness rather than demand destruction.

The surge in oil prices comes as Republican lawmakers and some Democrats have raised concerns about a potential rise in inflation. These worries are having a significant effect on the debate on the Democrat’s $3.5 trillion reconciliation package. Some Democrats like Joe Manchin of West Virginia and Krysten Sinema of Arizona feel that the reconciliation package might end up triggering a rise in the price of goods.

Republicans have been warning of potential inflation due to the package and blamed the Joe Biden administration’s climate agenda for causing a spike in the price of oil and gas. After coming to power, Biden halted new oil and gas leases on federal lands. Some officials have spoken against the move.

During a hearing, Lauda Daniel-Davis, principal deputy assistant secretary for land and mineral management at the Interior Department, said, “the production has stayed at levels consistent with past administrations. The pause did not impact ongoing permitting on legally held leases so that has continued, and the jobs associated with that have continued.”

A White House official stated that Washington was making use of “every tool at our disposal” to address anti-competitive practices prevalent in the energy markets so as to ensure reliability of these markets. Back in August, Washington had requested OPEC to boost the global oil supply to meet the demand.

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