Brent rises to $85 as energy crisis stokes demand before winter

Brent crude climbed above $85 a barrel in London for the first time since 2018, the latest milestone in a global energy crisis that has seen prices soar.

The global benchmark crude passed the key level in intraday trading on Friday, while US crude futures also advanced. The shortage of gas and coal is triggering extra demand for oil products from the power market, and some banks expect the switch to boost prices further during winter in the northern hemisp­here. 

It’s also starting to deplete stockpiles: the biggest US storage hub at Cushing recorded this week an unusually large supply decline for this time of year. 

Meanwhile, the US said it will open its borders to vaccinated foreign travelers next month, further signaling the potential for even stronger demand as economies rebound from the pandemic.  “More signs of energy supply tightness around the globe going into winter” is supporting prices, said Phil Flynn, senior market analyst at Price Futures Group Inc.

Brent is set for a sixth straight weekly gain in the wake of robust demand and limited supply. China also issued a long-awaited new batch of quotas for its private refiners to buy more crude, further pushing up consumption. Yet, Saudi Arabia’s Energy Minister Prince Abdulaziz bin Salman reiterated this week the need for OPEC and its allies to take a gradual, phased approach to restoring output.