Looming Opec supply increase propels oil prices to near-decade high

Oil prices shot up to their highest level in almost a decade today after the cartel of oil producing countries said it would continue to flood the market with supply.

International benchmark US WTI jumped 2.4 per cent to $77.67, the most a barrel has cost since 2014.

The gains follow six straight positive weeks for oil. Fellow international benchmark Brent Crude climbed 2.75 per cent to $81.46.

Oil prices have been supported by a resurgence in global demand for commodities, triggered by activity around the world rebounding as economies push to get back on track after the end of Covid-19 restrictions.

Prices tend to fall as supply increases, but traders are betting on red hot demand outstripping the jump in production keeping oil prices elevated.

Opec, in addition to Russia, agreed to push ahead with flooding the global oil market with around 400,000 barrels per day in November. 

The cartel has come under severe pressure to ramp up production to offset sharp increases in energy costs. US President Joe Biden has slammed Opec+ for not lifting production levels.

Roaring gas prices, which has triggered an acute energy crisis in Britain and caused several providers to go to the wall, has prompted businesses to switch to cheaper sources of energy, including oil.

Opec+ agreed in July to expand output by 400,000 barrels per day until April 2022, reversing sweeping cuts enacted in a bid to put upward pressure on oil prices after they sunk to historic depths during the height of the pandemic.