Highly Inflammable: Surge in global oil price

Last updated Jan 13, 2021

Experts have warned that there will be an increase in the oil prices because of the global pandemic. Irish businesses and motorists at the worst possible time.

Recently the price of benchmark Brent crude oil climbed to $56.50 (€46.30) per barrel, close to its level in Feburay before the onset of the Covid-19 crisis sent demand for oil spiralling downward.

During the first lockdown in April, the benchmark crude oil price had fallen as low as $19 a barrel.

The price has since hiked from $37.50 a barrel at the start of November, as the start of the approval of the first vaccines boosted hopes for a resurgent world economy this year.

As Saudi Arabia unexpectedly announced production cuts, the price of crude oil also jumped significantly.

The implications for Irish businesses, and food processing firms in particular as big energy users, as well as Irish motorists, are clear.

It takes almost two or three weeks for the price of wholesale crude oil to pass through to Irish pump prices and fuel costs, as tracked by distilled oil tankers at Rotterdam Port.

The crude oil prices had risen to reflect investors’ views that the vaccines will significantly boost the global economy and bring back some sort of level of normality this year, said Dermot O’Leary, chief economist at Goodbody.

AA Ireland’s Barry Aldworth said that pump prices would increase into February, if crude oil prices remained at current levels.

According to them, petrol was selling at an average price of €1.27 a litre and at €1.19 for diesel, in December when compered with €1.42 and €1.33 before the crisis in February, according to AA figures.

Mr Aldworth said that anecdotal evidence suggested that prices in the first weeks of this month had crept higher above December’s levels.

Ryan Fitzmaurice, commodities strategist at Rabobank said that: “Oil prices are rebounding again this morning as aggressive buyers emerge following the recent bullish oil calls from some of the larger and more prominent US investment banks.”