Value of oil production by country12/7/2023 Oil costs are keeping gas prices high even as driving demand drops with the end of summer vacations and plentiful gasoline stocks, according to auto club AAA.ĭiesel prices have risen as well, along with higher oil costs and refineries facing shortages of the specific kinds of crude best for making diesel. But at $3.85 per gallon, they’re still up 15 cents from a year ago. pump prices are still well below the record $5 per gallon seen in summer 2022. What’s the impact on consumers?Ĭostlier oil feeds through to higher prices for gasoline and diesel, especially in the U.S., where roughly half the pump price reflects the cost of crude - the rest is marketing, taxes and other costs.Ĭrude is a smaller share of gasoline and diesel prices in Europe because fuel taxes are much higher there.Īverage U.S. That could add 200,000 to 300,000 barrels a day. “turns a blind eye” on enforcing sanctions to keep prices from rising further, Leon said. Plus, more Iranian oil may come on the market as the U.S. “Much of the price surge beyond $85 per barrel is due to a flood of speculative money, while fundamentally there is still plenty of oil in the world to meet demand for now,” said Gary Peach, oil markets analyst at Energy Intelligence. READ MORE: Important inflation tracker shows small increase in sign of slowing prices ![]() “The oil price is only likely to climb more lastingly once the economic outlook begins to brighten, which should be the case next year.”Īnother factor is financial speculation, and it appears investors are piling into the oil market with bets that prices will rise. “We see the upside potential for the oil price as being virtually used up and if anything envisage setback potential in view of the weak economy,” said Thu Lan Nguyen, Commerzbank head of commodities research who foresees oil at $85 per barrel by year’s end. economy increases demand for oil - and the price - while weak growth in China and Europe has the opposite effect. That’s going to kill economic growth, and lower growth is going to mean lower oil demand at the end of the day.” What other factors affect prices?Ī big question is demand for fuel, which is picking up along with rebounding travel following the depths of the COVID-19 pandemic. “The last thing you want to do is fuel inflation again with much higher oil prices. “I don’t think it will be clever for the Saudis to push that hard,” Leon said. Excessive price increases could mean central banks worldwide hike interest rates further or keep them higher for longer. Leon said the Saudis will review the cuts each month - and could add barrels back if prices spike to levels that could seriously worsen inflation in countries buying oil. The Saudi cuts were a unilateral move outside the framework of the OPEC+ alliance, meaning the kingdom can make changes as needed to quickly respond to shifting market conditions. That’s still high historically, he said, supported by “resilient” demand for fuel to drive and fly. He foresees prices in the low $90s on average in the last three months of the year. Oil prices can be volatile, and while they might briefly top $100 in the coming months, they’re unlikely to stay there, said Jorge Leon, senior vice president for oil markets at Rystad Energy. Some analysts think oil could hit $100 a barrel based on robust demand and limited supply. ![]() oil traded at around $90.50, up from $68 before the Saudi cut. 5 and from $74 before the Saudi cut was first announced. International benchmark Brent oil traded at just under $94 per barrel Monday, up from $90 before the extension on Sept. Simply, tighter supply means higher prices. READ MORE: Saudi Arabia extends daily oil production cut through September to boost energy prices Russia, Saudi Arabia’s ally in the OPEC+ oil producers’ coalition, also extended its own cut of 300,000 barrels a month through 2023. The world’s second-largest oil supplier has slashed production by 1 million barrels a day since July and decided this month to extend the cut through the end of the year. Here are things to know about the recent increase - and where prices might be going: Why have oil prices risen?Ībove all, Saudi Arabia’s decision to cut back how much oil it sends to global markets has pushed prices higher. That poses problems for politicians as well as the people having to spend more to get to work, transport the world’s goods or harvest fields. ![]() The increase also complicates the global fight against inflation and feeds Russia’s war chest. FRANKFURT, Germany (AP) - Oil prices have risen, meaning drivers are paying more for gasoline and truckers and farmers more for diesel.
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