Oil Price Rises Above $90 a Barrel as OPEC+ Supply Narrows and Crude Inventories Decline

The Brent crude benchmark surpassed the $90 per barrel threshold during Asian trading, recording its highest level in seven months, amid a decline in US crude inventories by more than 6.3 million barrels last week, according to US Energy Information Administration data.

OPEC+'s adherence to voluntary production cut policies contributed to tightening global oil supply, while analysts at JPMorgan observed a decline in global surplus inventories to pre-2022 levels. Goldman Sachs' chief energy analyst noted that a structural deficit in the market could push prices toward $95 by the final quarter of the year.

On the other hand, other analysts warned that high prices could undermine demand in fragile emerging economies, particularly in South Asia and Africa, where the energy bill poses an exceptional burden on government budgets. Some analysts added that the rising dollar doubles the strain on these economies.

On financial markets, shares of major international oil companies rose by percentages ranging between 2% and 4%, while oilfield services company shares jumped by higher percentages amid expectations of accelerating drilling and exploration operations.

What do these terms mean?

Brent Crude: The primary price benchmark for oil in Europe, Asia, and Africa — extracted from the North Sea and typically used to price two-thirds of globally traded oil, making it more prominent than its US counterpart, WTI.

US Crude Inventories: The quantities of oil stored in US warehouses, measured weekly by the Energy Information Administration — a decrease indicates higher demand or lower supply, both of which drive prices higher.

Structural Deficit in the Oil Market: When global demand for oil exceeds available supply in a chronic rather than temporary manner — it differs from a seasonal deficit as it requires a deeper response than merely drawing down inventories.