On Monday, oil prices rose amidst strong demand. Political uncertainty and conflict in Syria also has brought an impact on the rise of oil price.
Brent crude futures (an international benchmark for oil prices), has increased by 23 cents or 0.42% following their last close. The per barrel price was now at $55.47 at 0544 GMT. Even the U.S. West Texas Intermediate (WTI) rose up by 25 cents or 0.49%. It closed its price at $52.49 per barrel.
Geopolitics affected the oil price hike not only in the Middle East, but as well as in the Pacific. Recently, the U.S. Navy has canceled its port calls to Australia for the planned USS Carl Vinson carrier group. It will then be redirected to the Korean Peninsula following missile tests done by North Korea. The recent U.S move against Syria can also lead to possible retaliation from its allies, Iran and Russia. Both countries have vowed support to Syrian President Bashar al-Assad. Countries like Singapore have been expressing concerns of potential disruption in supply since Syria is also a marginal oil producer.
India, now on the third spot after overtaking Japan as the world’s biggest oil importer, revealed that its oil demand grew by 4.9% ending March compared to its same month record last year.
In the meantime, prices will continue to rally due to uncertainties, thus affecting the crude-oil futures. In addition, the Organization of the Petroleum Exporting Countries (OPEC) despite mounting U.S. oil output is performing a supply cut to sustain prices until the first half of 2017. However, this may be extended, depending on the circumstances. U.S. producers and Brazilian exporters are benefiting from the artificial constricted market and supply cuts of OPEC. Brazil’s oil exports increased by 65%, thus, delivering 1.46 million barrels per day since February 2016.
Moreover, the Fed is projecting an oil price rise, too, during the summer months as travels spreads. This coming May and June, the Fed is set to meet again and the chance of an interest rate hike in May is anticipated to remain in single digits, whereas chances of a rate hike in June are estimated to be by 70%.
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