In the first week of 2021, a triple whammy caused a surge in crude oil prices, with North Sea Brent rising to US$70.73 per barrel ($93 per barrel) initially on Jan 6, the commodity’s highest level since Sept 2020, but fell back to US$53 per barrel during the afternoon in London. As at Jan 7, North Sea Brent is at US$54.43 per barrel.

Firmer 10-year US treasury yields, concerns over an Iranian retaliation for the murder of Qasem Suleimani a year ago by the Trump administration against a backdrop of chaos in the US Capitol, and news that Saudi Arabia will cut production by 1 million barrels per day voluntarily in February and March this year caused the jump in North Sea Brent.

RBC Capital Markets argues that the Saudi cut may not impact global production much. “Russia will be able to benefit from [the] price move, especially as it will be allowed to increase output by 75,000 barrels per day in combination with Kazakhstan.”

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