Brent crude, global oil benchmark, rose to $88 a barrel on Tuesday, on tighter supply by Organisation of Petroleum Exporting Countries (OPEC) and its allies.
On Tuesday, Brent crude futures gained 1.65% to $88.11 a barrel at 8.41 GMT+1, while U.S West Texas Intermediate increased 20.8% to $85.73.
Morgan Stanley, a multinational investment bank, had predicted that Brent crude would climb $90 a barrel in the third quarter of this year.
Two weeks ago, OPEC+ decided to retain plans to add 400,000 barrels of oil per day in February — resulting in higher oil prices and favourable sentiment in the global oil market.
Louise Dickson, a senior oil markets analyst for Rystad Energy, noted that the market forces behind the increasing prices have continued to tighten in 2022.
“The positive spin on price has broken into the third week of January, and the drivers behind the optimism have continuously tightened so far in 2022,” Bloomberg quoted Dickson as saying.
“A mild Omicron impact has increased oil demand expectations for the year, all while the supply picture gets tighter on lowered production in particular from OPEC+ countries.”
Oil prices have recorded more than a 10% increase in 2022 — partly due to output outages in some OPEC+ members’ quota, including Nigeria and Libya.
In December, Shell Petroleum Development Company of Nigeria (SPDC) had declared force majeure on exports of Nigerian Forcados crude oil after a malfunctioning barge obstructed a tanker path.
The current price is well above $62 per barrel earmarked in the 2022 budget.