Gas pulling oil price up further

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THE oil price today is nearing $100 per barrel, and it seems as though it could go up further in the coming months with the approach of winter season, and the tightening of gas supply as well as oil supply from Russia. Russia has so far not been much hurt by the boycott of its oil supply by Europe, as it opened its valve to the Asian market with huge discounts.

Its oil export volume has fallen by 2.2 million but was replaced through exports mainly to China, India, and Turkey with a hefty discount of $30 per barrel. It is still not clear as to why gasoline prices in the USA are hitting $4 a gallon, but there is no doubt that it will go up shortly.

Regardless, in our opinion, the demand will come down due to gas supply tightness, if not shortage, because of the tighter grip on Russian gas supply to Europe. The challenge for Europe is the gas supply, and its impact on household users with the price shooting up. This is causing every home to become frightened about how to face the winter months, with limited budget, and with energy bills becoming triple times higher than last year’s rate, despite the fact that the full impact of the complete boycott on Russian imports will be effective from February next year.

The current unprecedented heat wave hitting Europe is not helping the energy situation, as it is pushing for the switch to electricity generation using oil as its main source of supply. In addition, our Gulf region is experiencing temperature levels up to 50 degrees Centigrade, which is pushing generators to its peak high. Fortunately, 30 percent or more of the Gulf population are outside their countries enjoying better and cooler weather, and thus saving some power for the holiday makers.

The real challenge for the European energy consumers is worrisome, as they are facing hard and tough prices, along with high food prices that could cause havoc for their governments who need to find the best ways and means to curtail their sufferings. Oil today is being pulled by the European gas consumers as their alternatives, with the winter season being close by and with no less expensive solutions in hand. Unfortunately, the oil prices will go up, reaching beyond $100 per barrel, resulting in dilemmas for other nations. The energy producers don’t have much solution in hand.

By Kamel Al-Harami
Independent Oil Analyst
email: [email protected]

This news has been read 12630 times!