Brent Crude Drops 1.5% after Reaching $80, Highest since 2018

Brent crude fell 1.5% to $78.38 a barrel, after hitting its highest level since October 2018 at $80.75, as prices are facing headwinds from the energy crisis in China, the world's largest energy consumer.

West Texas Intermediate (WTI) lost 1.4 percent to $74.42 a barrel, after hitting a session high of $76.67, its highest since July.

India, the world's third largest oil importer, indicated that higher oil prices would speed up the shift to alternative energy sources.

Louise Dixon, chief oil markets analyst at Rystad Energy said the $80 increase in the price of Brent crude highlights how rising fuel demand and concerns about a lack of supply have become a new topic in the market.

Moreover, Hurricanes such as Ida and Nicholas damaged platforms, pipelines and processing centers, shutting down most offshore production for weeks.

Sources said Nigeria and Angola, Africa's largest oil exporters, will struggle until at least next year to increase production to quotas set by the Organization of the Petroleum Exporting Countries (OPEC), citing a lack of investment and maintenance.

"Oil markets are accelerating, as persistent supply shortfalls reduce the inventory cap to a decades-low level," Barclays said in a note. The British multinational universal bank raised its 2022 Brent forecast to £77 a barrel, pegging WTI at $74.

Morgan Stanley sees Brent trading between $77.5 and $85.

OPEC on Tuesday forecast that oil demand will grow sharply in the next few years as economies recover from the pandemic, adding that the world needs to continue investing in production to avoid a crisis.