Last week, Brent crude oil prices jumped above $90 and are currently holding at that level due to tensions between Iran and Israel. Additionally, global logistics issues are influencing the price.
Bloomberg warns that Brent could reach $100 per barrel by August or September.
Last week, the price of Brent surged above $90 and has since remained at that level. According to the agency, the increase was influenced by tensions between Iran and Israel. Additionally, Bloomberg cites global supply problems as a key factor in the price hike.
At the end of trading on ICE, Brent crude oil reached $90 per barrel—its highest level since October of last year—last Thursday, April 4th. The rise continued on Friday. JPMorgan Chase investment bank stated that Brent could reach $100 per barrel by August or September due to several factors. Mexico’s decision to reduce crude oil exports in the past month led to a 35% decrease, the lowest level since 2019. This has reduced US crude oil exports to the global market as the US is now consuming more domestically. The trend is likely to continue as Mexico’s Pemex canceled some contracts for foreign refinery supplies. In addition to Mexico and the US, Qatar and Iraq reduced exports in March, cutting more than one million barrels per day in total, based on tracker data. Other influencing factors include attacks by Houthi rebels on tankers in the Red Sea (forcing ships to take alternative routes), US sanctions complicating Russian oil supplies, unrest in Libya, and damage to an oil pipeline in South Sudan. The OPEC+ production reduction strategy also has a significant impact. Forecasts for the future sharply contrast with data from a month ago when oil prices hit lows due to increased US production and increased maritime exports of Russian oil. Earlier assumptions that global inventories would remain unchanged this quarter have shifted to a likely decrease of 900,000 barrels per day.
The rise in oil prices almost makes it impossible for the US President’s administration to increase oil reserves in the US, which have already reached a 40-year low, as reported by the agency.
The situation also presents political risks for Joe Biden, as food and energy prices remain high in the US and retail prices are expected to sharply increase. All of this will inevitably lead to an acceleration of inflation during the pre-election period.