Will Oil Prices Stop Soaring?
We’re rapidly starting to feel the aftereffects of Covid emergency economic measures. On top of that, the ongoing aggression towards Ukraine from Russia is slowing the energies market everywhere. With that, major inflation is rippling throughout the globe, seriously affecting most countries.
For the US, the most immediate impact we can see is from oil prices. Anyone with a car has noticed a significant price hike, drastically impacting our daily budgets. That may be good news for oil traders and investors, but not as much for the everyday person.
The EU does intend to stop importing oil from Russia as a means of economic punishment. The UK and US have moved away already due to their lower degree of dependence on Russian oil. However, that does result in the global supply is much lower while demand remains unchanged. Following base economic principles, that translates to higher prices.
And as we can see if we look at current oil prices, the rise doesn’t seem to be stopping. West Texas Intermediate crude for June is up 97 cents, which translates to a rise of about 0.9%. The global June Brent crude inclined even steeper, leaping 1.1%, landing at $107.99 a barrel. Experts don’t see the trend ending until without major shifts in global supply and demand.
The current situation isn’t a single-source occurrence but rather a perfect storm of negative consequences. The Covid halt significantly weakened the global economy and caused banks all over the world to hike inflation. Meanwhile, the Ukraine war is stirring worry in markets around the world, along with damaging the global supply of many commodities, including oil. Further complicating things, some other suppliers like Lybia have had accidents that further strengthened the shortages. The country’s National Oil Corporation reported it would produce 550,000 fewer barrels a day due to blockades.
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