US pressure helps push oil price below $70

White House warns high cost of crude is a threat to the global recovery and calls for action from Opec

OIL fell below $70 a barrel yesterday after Joe Biden put pressure on the Opec cartel to ramp up production in an attempt to bring down energy prices.

The White House said higher prices “risk harming the ongoing global recovery” as costs rebounded from $45 last August to a high of $77 in June.

Jake Sullivan, the US President’s national security adviser, said: “The price of crude oil has been higher than it was at the end of 2019, before the onset of the pandemic.

“While Opec+ recently agreed to production increases, these increases will not fully offset previous production cuts that Opec+ imposed during the pandemic until well into 2022.

“At a critical moment in the global recovery, this is simply not enough.”

He said Mr Biden wanted “affordable and reliable energy, including at the pump”, adding: “Competitive energy markets will ensure reliable and stable energy supplies, and Opec+ must do more to support the recovery.”

Opec is made up of major oil producers including Saudi Arabia, Iraq, Iran and Venezuela, while Opec+ adds nations that join the group in influencing prices, such as Russia.

The impact has been starkly visible in petrol prices, which have risen to almost 135p a litre on average, according to official figures – the highest level since 2013.

Prices fell last year from 127p before Covid to below 105p as global oil prices collapsed. They have now more than recovered, hitting drivers still wary of using public transport in the wake of the pandemic.

High prices and calls for Opec action have raised fears about a repeat of the oil shocks of the 1970s when sharp rises cast much of the world into recession. However, the global economy is now less reliant on oil and has alternative sources of production including US frackers. The shale boom has been burned by price falls, leaving producers reluctant to ramp up production heavily on market moves that could prove temporary.

Opec cut production in the pandemic, when demand plunged and prices in some markets turned negative as traders ran out of places to store oil.

Last month the group agreed to raise production again, raising output by 400,000 barrels a day every month from August with the aim of restoring the quantity pumped back to its precovid level by late next year.

Geopolitics is not the only factor affecting prices. Fear of a new wave of Covid is also holding them back as slower global economic growth will limit demand.

The US’S own stockpiles of oil are shrinking more slowly than previously expected, nudging prices down.

China, the world’s second-largest economy, is also showing signs of weakening demand as the delta variant spreads, forcing new lockdowns.