Start with a question. Is the global oil price higher now than it was when Russia invaded Ukraine? Higher, surely – isn’t that why our fuel bills are soaring? Well, the answer is that it is a tiny bit lower.
Brent crude is $94.66 a barrel now, whereas on 23 February it closed at $96.84. It could jump up tomorrow – and, thanks to the rise of the dollar, it is still higher in sterling or euro terms. That is part of the reason why we are still paying more to fill up our cars. But when you get a surprising market movement like this you have to ask why, and then think through what the markets might be trying to tell us.
The “why?” must start with the point that the market seems to be moving into a global surplus. Production, according to the International Energy Agency, is up a bit. Russia seems to be getting its oil out despite sanctions. The US is pumping as much as it can. And the Organisation of the Petroleum Exporting Countries (Opec) has just agreed to a small increase in output in September.
