Why Oil Prices Remain Subdued

Business|Why Oil Prices Remain Subdued

Oil prices have perked up recently from a spell of torpor because a political dispute in Libya has curtailed much of the North African country’s output.

Early on Friday, futures for Brent crude oil, an international benchmark, were selling for just over $80 per barrel, an increase of about 5 percent from 10 days ago, before falling back below that mark. Yet considering the degree of political turmoil not only in Libya but in the Middle East, the world’s petroleum hub, the market seems surprisingly calm.

Current price levels can be described in different ways — low, moderate — but they are certainly not high compared with recent historical metrics. The average inflation-adjusted annual price for dated Brent, a metric closely related to oil futures, was $94.91 a barrel from 2010 to 2023, said Jim Burkhard, head of energy markets research at S&P Global Commodity Insights.

“It’s not a high price; it’s not a low price,” he said.

Still, ahead of the Labor Day weekend, consumers in the United States are enjoying a respite. At $3.31 a gallon on Monday, gasoline prices were, on average, 13 percent lower than this time last year, the Energy Information Administration said.

The oil supply is plentiful.

The world is well stocked with oil, analysts say. Demand continues to grow, but production seems likely to keep pace.

Brazil, Canada, Guyana and the United States are all increasing their oil output, countering cuts from the Organization of the Petroleum Exporting Countries producers group and its allies, which have held back production by about five million barrels a day, or about 5 percent of global demand.