Oil prices are poised to continue their climb in the coming months as planned OPEC+ production cuts take hold in international markets, the International Energy Agency (IEA) reported Friday.
Russia and Saudi Arabia are undertaking considerable production cuts, which have helped drive the rising prices, according to the IEA report. If OPEC+ maintains its previously announced targets for reduced supply, there is “a risk of driving prices still higher,” the report reads.
Beyond the reduced supply, “strong summer air travel, increased oil use in power generation and surging Chinese petrochemical activity” have also contributed to the rising prices, according to the report. (RELATED: Gas Prices Spike Almost 30 Cents In Just A Month, Posing Potential Headache For Biden)
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Brent crude oil prices, which are considered an indicator for the international oil market, are hovering around $85 to $86, a level that stands as a six-month high, according to data available on Google Finance. While Brent crude prices have been on a steady upward trend since late June, they have not returned to August 2022 levels, when prices briefly went over $100 before dropping again.
Additionally, prices for Urals crude have exceeded the price cap imposed on Russian oil by the Group of Seven (G7) countries in response to Russia’s invasion of Ukraine, the IEA reported. This development renders “all Russian oil exports ineligible for G7 and EU maritime services,” according to the IEA report.
The Biden administration opted on Aug. 1 to delay refilling the strategic petroleum reserve (SPR) because oil prices were too high. Biden chose to release tens of millions of barrels from the SPR to decrease domestic prices ahead of the 2022 midterm elections, and it could take “decades” to refill the SPR, which now sits at its lowest level in 40 years.
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