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Oil price reaches highest point in close to three years

The price of oil increased for the third consecutive week to a near three-year high on Friday as supply chain issues have required energy firms to dip into their reserves.

The surge slowed somewhat as China announced that it sold some of its crude reserves.

At the time of writing, Brent crude oil is valued at $78.07.

Yesterday’s close, which was around the same level, was the highest since October 2018 for Brent.

A major cause of the rally appears to be Hurricane Ida, which occurred towards the end of August on the US Gulf Coast.

"As oil prices are on track to close another week of gains, the market is pricing in a prolonged impact of supply disruptions, and the likely storage draws that will be needed to fulfill refinery demand," Louise Dickson, senior oil markets analyst at Rystad Energy, told Reuters.

The impact of the disruptions could be felt for months, as the US has been forced to use its global inventories.

In response to the pandemic government policies used to stimulate the world’s economies has resulted in a surge in energy consumption.

This could well be another factor which serves to explain current shortages and high prices.

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