Oil prices are at their highest levels since October

Over Easter and into this week, oil prices rose significantly.

A barrel of North Sea oil was trading today at $90.3, an increase of more than 1 percent from Wednesday. This is the highest level since October last year.

The backdrop is a tight market and increasing geopolitical uncertainty, both in the Middle East and in the war between Russia and Ukraine. As a result, there was a shift in the oil market.

The OPEC+ monitoring committee recommended no changes during its digital meeting on Wednesday, and also announced that Russia would shift production cuts from export restrictions.

– What's new this year is that the oil market has tightened significantly and as a result of OPEC+'s confirmation on Wednesday that it will maintain current production cuts until further notice. There is every reason to believe that this tightening will continue after spring, Arctic analyst Ole Rikard Hammer tells Finansavisen.

So far this year, oil prices have risen more than 17 percent.

High risk

Hammer believes that there is no evidence that rising oil prices will affect the global economy at the present time.

– It is difficult to assess the situation in the Middle East, Russia and Ukraine, but the tighter the market, the more important geopolitics and market willingness to give a risk premium to price become. The hammer continues to increase as the balance becomes tighter as the fear of turbulence increases.

– There are many forces that do not want oil prices to rise. Neither central banks nor politicians, especially in the United States, the European Union, and eventually Saudi Arabia, will do so either.

Hammer explains that energy supplies have become a legitimate target in war.

As long as the war in Gaza continues, it seems unlikely that Saudi Arabia and others will increase production and contribute to lower prices. The Saudis had a goal of raising prices and would likely go to great lengths to achieve this.