Price of Crude Oil rises with the increase in supply

The price of both the Crude Oil rises in the US due to uncertain supply Oil prices increased as a result of the constrained supply straining to satisfy the still strong demand and the Iranian nuclear talks appearing to hit roadblocks. The intermediate Crude Oil increased by 42 cents and the Brent Crude Oil increased by 63 cents. The prices of the oil hardly changed last week as the lockdown in China, which is Crude Oil largest importer in the world, invalidated from a speculative amount of supply cut by the Petroleum Exporting nations and allies like Russia. This group of countries are known as the OPEC+.

According to France, Britain, and Germany, there are “severe doubts” about Iran’s intentions to resurrect a nuclear agreement. Iran’s oil would remain off the market and the supply would remain constrained if the 2015 agreement was not revived. With supply projected to tighten further once a European Union ban on Russian oil takes effect in December, global oil prices may rise again before the end of the year.

In an effort to penalise Moscow for its invasion of Ukraine, the G7 will impose a price restriction on Russian oil, while also taking steps to ensure that oil can still reach developing countries. Although, the US treasury provided with the deterrent that the cap will cause oil and gasoline prices to rise in the winters.Another bad news for the market is that the zero covid policy of Beijing, which says people have to stay at home during the holidays, results in the lowering of the consumption of gasoline which further cause the oil demand of China to decrease for the very first time in two whole decades.

Concurrently, the Federal Reserve of the US and the Central Bank of Europe are forced to increase the rate of interest to prevent inflation in the near future. As of result of this step the price of the oil will increase in US dollar for the foreign investors.