By Chrysostomos Tsoufis

Saudi Arabia caught the market off guard and oil soared to a 10-month high above $90 a barrel.

Everyone expected the Saudis to extend oil production cuts through October. After all, they had been deciding month by month since July. But Riyadh announced it would continue to supply the system with 1 million barrels less per day until the end of December. And as happened in the 2 previous cuts, Moscow immediately followed by extending this cut to its exports until December by 300,000 barrels per day.

It is the third extension that Saudi Arabia has decided since July and is largely “responsible” for the explosion of oil prices by 25% in the last 40 days. On June 12, black gold was at $71.8/barrel and on September 5 it exceeded $90/barrel.

But it is not the only reason. Lately – and after the August unemployment data in America which rose against estimates to 3.8% – there is an expectation that the Federal Reserve Bank of the United States it will put an end to – or at least a colon – interest rate hikes.

At the same time, particularly encouraging are the data from China, which is finally showing signs of awakening. The manufacturing index returned in August to values ​​above 50 – which indicate growth -, a development that analysts did not expect.

Many analysts also argue that the Chinese “thirst” for travel alone is capable of driving black gold prices into triple digits by the end of the year.

The evidence shows that the Chinese domestic flights they found themselves surpassing the total of 2019 already in the 3rd quarter when last year it was at 75-80%. But road transport is also booming, with China’s summer gasoline sales up more than 20% on last year’s results.

To all this, of course, must be added the fact that the petroleum market is characterized by low reserves and a very low level of investment in new pumping and refining facilities.

This appreciation of the black gold, once consolidated, is multiply burdensome. It further increases energy inflation and contributes to food price increases as well. It thus makes the job of central banks more difficult, which will have to decide whether to continue raising interest rates, further damaging growth prospects.

Fate of all this will also affect the Greek market. Even before the price increases of the last few days, the gas station owners claimed that they are trying tooth and nail to keep unleaded prices below the psychological limit of €2/liter – in the urban centers. At the same time, they warn that – if discounts are not decided by the government and refineries like last year – this year’s heating oil sale price will approach €1.5/litre.