On Tuesday, oil prices across the globe rise and possible supply disruption is expected, especially in the Middle East.
On April 7, USA, France, and Britain launched military strikes against Syria’s chemical type targets, a response to a suspected poison gas attack in Douma, Syria, which killed at least 60 people.
Brent crude oil futures (LCOc1) now cost $71.69 per barrel. It rose 27 cents or 0.4 percent from its last close. According to JP Morgan, a New York-based financial company, Brent crude price could go up to $80 per barrel.
US West Texas Intermediate (WTI) crude futures (CLc1) are now $66.54 a barrel. It rose 32 cents or 0.5 percent from its last close.
Australian oil also reached its peak price since 2014. The wholesale price of fuel from Singapore to Australia rose 14% from 2017. As a result, an average fuel is now 10 cents higher or $1.42 per liter compared to its price last year.
Benchmark oil futures hit more than their three-year highs last week. A strong demand for petroleum products and a buoyant drop in global crude stockpiles caused the price hikes.
Recent geopolitical conflicts will further increase oil prices; but according to Barclay’s head of energy commodities research, the energy market could experience a price tumble on the third quarter of 2018.
“With so many potential supply disruptors in play and few signs that the current market upheaval will end any time soon, traders continue to pay the geopolitical risk premium,” said Stephen Innes, OANDA’s head of trading for Asia-Pacific.
JP Morgan oil strategist Abhishek Deshpande said that the war has severely affected Syria’s oil industry. This year, Syria only makes 25,000 – 30,000 barrels per day (bpd) compared to its production of 350,000 – 400,000 bpd two to three years ago.
US Output Soars
Meanwhile, USA’s crude production (C-OUT-T-EIA) has soared by almost a quarter since mid-2016 to 10.53 million bpd. The production increase is caused by the booming of shale industry.
On the other hand, the Russian Federation is pumping out more oil currently at almost 11 million bpd.
According to Philip Futures’ Benjamin Lu on Tuesday, “US shale producers have been quietly capitalizing on higher oil prices with increasing rig counts seen. A staggering amount of 73 rotary rigs have been placed since January 2018.”
He added, “As such, we expect a softening in crude oil prices as markets adjust from a bullish streak.”
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