The price of oil continues to move toward $100 a barrel for the first time in nearly a year, creating a new inflation headache for central banks.
Brent crude, the international benchmark, rose above $95 a barrel this morning. which is the highest level since November 2022.
Oil is rising on concerns about supply shortages following recent production cuts by Saudi Arabia and Russia, which were extended until the end of this year.
Kyle Rodda, Senior Financial Markets Analyst at Capital, says:
"Even though the pair looks technically overbought, upward momentum looks strong, with a combination of supply and demand factors supporting the rally. Of course, the main news here is the expected supply shortfall flagged by OPEC+ last week.
The cartel says it sees a shortfall of 3 million barrels a day in the final quarter of this year, which would be the biggest since 2007. Rising oil prices contributes to higher returns, especially over the long term, although stock markets have proven to be surprisingly resilient.
The price of Brent crude oil was below $80 a barrel in early 2022 before soaring to around $130 a barrel after Russia invaded Ukraine last March, fueling inflation last year."
The price is now expected to be $100 per barrel. And Björn Schildrop, chief commodities analyst at SEB, predicts that oil demand will weaken if prices continue to rise above $100 a barrel.