Dubai Crude Marks Record High of $37

Dubai crude, which accounts for 70 percent of the nation’s oil imports, exceeded $37 per barrel, marking its highest price ever.

Also, with the West Texas Intermediate (WTI) crude futures passing $44 for the first time, the rise in international oil prices is not showing signs of stopping.

If this hike in oil prices continues, it is expected that the adverse effects to the Korean economy, including to exportation prices, will become even deeper.

According to the Korea National Oil Corporation (KNOC) on Tuesday, the spot price for Dubai crude traded on August 2 stood at $37.00 per barrel, rising by $1.09 from the previous day. This figure is about a dollar higher than the former record-high of $36.23 set on May 13.

Accordingly, the 10-day average price for the Dubai crude stood at $35.30, surpassing the $35 mark, which activates the third step for emergent measures for high oil prices. It was the first time in two months that the 10-day average price passed the $35 mark since June 7.

KNOC Director of the Overseas Investigation Department Ku Ja-kwon said, “The forecast for a comparative shortage in the international oil supply from the demands and the concerns for terror inside the U.S. had an effect on the increased Dubai oil price.”

At the New York Mercantile Exchange, the WTI futures price for September delivery in after hours trading was $44.16 per barrel, a gain of $0.34 from the prior day’s closing price. This is the highest ever since oil futures trading started in New York in 1983.

WTI futures closed at $43.82, an increase of $0.02 from the day before, marking a record-high in just one day.

The spot price for WTI crude also rose by 11 cents to stand at $43.73 on August 2.

Oil experts forecast that since the Organization of Petroleum Exporting Countries (OPEC) has increased oil production and has none left to spare, the instability in oil prices will continue for the time being.

OPEC Secretary General Purnomo Yusgiantoro said, “OPEC member countries cannot afford to increase production at the moment. OPEC ministers will meet in September to discuss the oil supply-demand matter.”

Chi-Young Shin higgledy@donga.com