Oil prices have returned to pre-pandemic levels. The price of the world’s favourite commodity slumped last spring as major economies locked down. US oil futures briefly turned negative as traders found themselves stuck with fuel that nobody wanted. Yet Brent crude prices have rocketed by 180% since their nadir to trade above $60 a barrel this week. Before Covid-19 took hold the contract was trading around $59 a barrel.
Joe Biden’s announcement that he will not lift sanctions on Iran (see page 10) provided the “immediate catalyst” for the latest price bump, says Julia Horowitz on CNN. But the broader rally is all about the vaccines and hopes that big economies are well on the way to returning to normal. On the supply side, oil exporters’ cartel Opec and ally Russia have continued to limit output. Saudi Arabia’s announcement that it will cut output by a further one million barrels per day (mbpd) from this month has provided an extra fillip. Opec and its allies have “held back a cumulative 2.1 billion barrels of oil” since last April, says Justin Harper for the BBC. They didn’t have much choice: air passenger traffic is still down by 70% on last year.
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