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Rashid Husain SyedWith a winter storm gripping the United States, geopolitical tensions continuing to haunt the markets and oil-producing nations unable to meet their output targets, crude oil prices reached a seven-year peak last week.

Brent crude rose US$1.71, or 1.9 percent, to US$92.82 a barrel on Friday afternoon, having earlier touched its highest level since October 2014 at US$93.05. U.S. West Texas Intermediate crude rose by US$1.84, or two percent, to US$92.11 after also scaling a seven-year peak at US$92.33.

A growing buzz within the oil fraternity suggests three-digit prices could be just around the corner. “It may just be a matter of time until we’re closing in on triple figures,” Reuters quoted Craig Erlam, senior market analyst at OANDA, as saying. He’s not alone in this perspective.

Besides the geopolitical tensions and the storm gripping the U.S., the lack of spare capacity within the Organization of Petroleum Exporting Countries and their allies in OPEC+ also weighs heavily on the markets. In January, OPEC’s 13 members added just 50,000 barrels a day to the markets, fanning concerns that the spare capacity buffer is dwindling, Bloomberg reported.

The inability of OPEC+ to match  announced output increments concerns market observers, causing prices to surge further.

Rising crude prices pose political challenges to governments around the globe. Climate issues could take a back seat – and that carries colossal repercussions.

Rising gasoline prices have a major impact on consumers filling their vehicle tanks. Prices across Canada shattered record highs on Friday. At gas stations near my home in Burlington, Ont., prices passed $1.55 a litre on Friday afternoon. The price-tracking website reported the national average retail fuel price at $1.516 per litre as of 1 p.m. ET on Friday.

That’s the highest average price on record, according to the website, which has data as far back as 2008, Canadian Press reported.

And that’s 38 cents higher than the average price at the pumps last year, 11 cents higher than the average last month and almost four cents higher than the price of gas just last week.

Pressure is building on politicians to cool the markets. The Canadian Taxpayers Federation (CTF) is pushing the federal government to rethink its carbon tax plan. The group has launched a petition on the issue.

Pressure is also building on Ontario Premier Doug Ford to deliver the tax relief he promised during the 2018 election campaign. Ford vowed to cut the provincial gas excise tax by 5.7 cents a litre. He has since promised to implement the tax cut by March 31. CTF wants Ford to immediately put the cut in place.

“Ontario taxpayers have been waiting for the premier to keep his promise and cut the gas tax for almost four years and it’s finally time for him to deliver,” wrote Ontario CTF director Jay Goldberg for Troy Media recently.

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In the U.S., retail gasoline prices have surged to their highest level since 2014, climbing to US$3.42 a gallon, according to the American Automobile Association. The government of President Joe Biden is feeling the heat. With the Democrat majorities in the House and the Senate at stake in an election year, the administration can’t afford these prices to persist.

Biden has few tools to deal with the issue. One option is to let Iranian crude back onto the market, with some reports suggesting a deal could be announced soon. Or he could plead with other Middle East oil-producing nations to open their taps.

Both these possibilities carry political costs, but Biden seems to have no other options, and he appears ready to move.

Toronto-based Rashid Husain Syed is a respected energy and political analyst. The Middle East is his area of focus. As well as writing for major local and global newspapers, Rashid is also a regular speaker at major international conferences. He has provided his perspective on global energy issues to the Department of Energy in Washington and the International Energy Agency in Paris. For interview requests, click here.

The opinions expressed by our columnists and contributors are theirs alone and do not inherently or expressly reflect the views of our publication.

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