Oil prices rose on Thursday morning, hitting heights not seen since late 2014.
The surge was reported in a Reuters report that new price hawk Saudi Arabia would be happy for crude to rise to $80 or even $100, a sign Riyadh will seek no changes to a supply-cut deal even though the agreement’s original target is within sight.
Crude Oil WTI Futures for May delivery was trading at $68.83 a barrel, up 0.53%, from its previous closing. Brent Oil futures for June delivery, traded in London, were up 0.41% at $73.78 per barrel.
The Organization of the Petroleum Exporting Countries (OPEC), Russia and several other oil producers have been cutting output since January 2017 in an attempt to reduce the global oversupply and prop up prices.
OPEC is closing in on the original target of the pact – reducing industrialized nations’ oil inventories to their five-year average. However, there is no indication yet that Saudi Arabia or its allies want the supply cut to end.
In fact, the kingdom seems to want the pact to go further, with a desired crude price of $80 or even $100, according to senior Saudi officials in recent closed-door briefings.
“Oil prices have the potential to rise another 15 percent over the remainder of 2018,” said a market analyst.
With crude prices on the rise, those producers not participating in voluntary restraint are ramping up output.
U.S. crude production has jumped by a quarter since mid-2016, to a record 10.54 million barrels per day (bpd).
That’s more than Saudi Arabia produces. Only Russia churns out more oil, at almost 11 million bpd.