Why oil prices have gone up recently

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Oil prices have climbed in recent weeks, spurred by concerns over supplies and geopolitical risks, including wars in Ukraine and the Middle East.
Analysts say the momentum could carry prices higher.
The price of a barrel of Brent crude oil, the international benchmark, has risen more than 20 percent since mid-December.
Rising oil prices could make efforts by central banks to reduce inflation more challenging.
In the United States, higher gasoline prices during the summer driving season would also be unwelcome for the Biden administration, which faces a difficult election in November.
Market watchers note that a short-term retreat in prices, after such a rapid rise, is also possible.
The oil price also remains below the peaks reached in 2022, when prices jumped well above $100 a barrel.
Prices remained subdued for much of the year despite the threats posed by geopolitical tensions.

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Concerns about supply and geopolitical risks, such as wars in the Middle East and Ukraine, have caused oil prices to rise in recent weeks. Experts predict that the momentum will push prices upward.

Since the middle of December, the price of a barrel of Brent crude oil—the global standard—has increased by more than 20%. It has increased by over 10 percent in just the last month, reaching about $90 per barrel. “The attitude is extremely optimistic,” stated Viktor Katona, an analyst at the commodities research company Kpler.

Increasing oil prices may complicate central banks’ efforts to lower inflation. A difficult election in November awaits the Biden administration in the United States, where higher gas prices during the summer driving season would also be undesirable. According to the Energy Information Administration, the average price at the pump has increased by roughly 50 cents per gallon since early January, to approximately $3.70.

The possibility of a brief price decline following such a sharp increase is noted by market observers. In addition, oil prices are still lower than they were in 2022, when they surged to well over $100 per barrel.

The world’s largest oil producer, the United States, and other nations outside the Organization of Petroleum Exporting Countries saw rapid increases in their crude output in 2023, which helped reassure markets that there would be enough oil to meet demand. Throughout the majority of the year, prices stayed low despite the risks posed by geopolitical unrest. For the most part, markets ignored the dangers that the war between Israel and Hamas presented.

However, 2024 seems to be a very different year. Contrary to what some analysts predicted, demand has exceeded expectations. Concerns about a possible supply squeeze have also been sparked by a number of potentially upsetting events as well as production cuts by Saudi Arabia and its allies.

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