This price increase follows three weeks of gains, which have lifted prices by 11 percent. Saudi Energy Minister Prince Abdulaziz bin Salman is scheduled to address a conference on the kingdom’s crude policy and its stance on net-zero emissions.
With Saudi Arabia and Russia extending supply curbs until the end of the year, the Prince’s remarks at the World Petroleum Congress in Calgary are highly anticipated.
Brent crude, the global benchmark, is now nearly 10 percent higher year-to-date due to the production cuts by OPEC+ members and an improving demand outlook.
Oil prices surge amid global supply
This comes as the United States appears to be avoiding a recession and Chinese refiners are operating at full capacity.
Consequently, global crude stockpiles have declined, and speculators have increased their bullish positions on both Brent and the US benchmark West Texas Intermediate to a combined 15-month high.
This surge in oil prices is expected to contribute to inflationary pressures worldwide, just as central banks, including the US Federal Reserve, are contemplating whether their efforts to combat rising prices through interest rate hikes have been sufficient.
This week is poised to be pivotal for monetary policy decisions, with announcements expected from the Fed, the Bank of England, and other major central banks.
While attention may shift to the upcoming Fed meeting, the market remains underpinned by growing supply constraints and diminishing inventories,” said Vandana Hari, founder of consultancy Vanda Insights.
In the physical market, concerns are emerging about refined products like diesel, as global refineries struggle to meet demand for this industrial fuel, leading to substantially higher prices compared to crude oil.
Key indicators, such as crude time spreads, are also signaling tight market conditions, with the gap between the two nearest Brent contracts at 92 cents per barrel in backwardation, the widest since November. This reflects a shortage of near-term supplies.
However, some analysts caution that a pullback may be in store after the rapid and significant price increase.
Brent’s 14-day relative-strength index has been above 70 for nine of the past 10 sessions, suggesting that the rally could pause or even retrace as traders assess recent gains.”