Oman oil price crosses $84 trades at its highest in recent years

Muscat: The price of Oman oil crossed the $84 mark to climb to the highest price it has reached in a long time, and could go even higher, said an economist in the country.

According to the Dubai Mercantile Exchange (DME), the marker price for Oman crude futures rose by more than a dollar and a half overnight to reach $84.26 on 25 October.

“Yes, it is true that the current price of oil is the highest it has been in several years, even as oil prices continue to rise steadily,” explained Dr Mohammed Al Wardi, an economic analyst. “This is due to two main reasons: the first is the recovery of the global economy from the coronavirus pandemic, which has led to increased demand for oil.

“The second reason is also global in nature: it is to do with issues around electricity supply, particularly in the countries of the European Union,” he added. “Weak winds have led to a drop in output from renewable energy, while there has also been a fall in gas stockpiles, since gas suppliers are few in number.

“This has led to gas prices increasing nearly five-fold during this year, while coal prices have also climbed, which has led to power supply problems in China, since that country relies on coal to fuel its power plants,” he added.

“The increased demand for coal and gas means it is likely more countries will turn to oil, and that has led to an increase in prices.”

Despite the hike in oil prices, however, they remain significantly lower than either coal or gas.

It is expected that oil prices will continue to rocket forward, towards the $90 mark, or may even reach a value of $100 per barrel.

“This is according to the expectations of some Western sources, especially in the coming winter season, where the low temperatures will increase demand for electricity for heating and other purposes,” said Al Wardi.