Oil Prices on the Rise: Economic Growth, Conflicts and OPEC Policies Driving Changes in Global Oil Market

Increasing Oil Prices Linked to Supply Shortages and Positive U.S. Economic Indicators

On Thursday, early Asian trade saw a rise in oil prices due to concerns about lower supply and stronger economic growth in the U.S., which is the world’s largest oil consumer. Signs of increased economic activity have contributed to this rise, with Brent futures for June and U.S. West Texas Intermediate (WTI) futures for May both increasing by 15 cents.

Recent events, such as disruptions to fuel supply caused by attacks on Russian refineries and concerns about the Israel-Hamas conflict possibly spreading to include Iran and disrupting supplies in the Middle East, have also contributed to the price increase. Despite these challenges, OPEC and its allies chose to keep current oil supply policy unchanged at a meeting held by top ministers on Wednesday. Some countries were encouraged to increase compliance with output cuts, while Russia announced a shift towards output cuts rather than export curbs.

Federal Reserve Chair Jerome Powell’s cautious approach to future interest rate cuts was seen as positive for oil prices, based on recent data showing higher-than-expected job growth and inflation. This suggests strong economic growth in the U.S., which is a major driver of global demand for oil. Additionally, Iran’s vow to seek revenge against Israel for an attack that killed high-ranking Iranian military personnel has also impacted oil prices, given its role as the third-largest producer in OPEC and its significant influence on the oil market.

Overall, despite some uncertainty around global events affecting supply and demand for oil, recent data suggests that strong economic growth and supportive policies from major producers are likely to keep prices stable or rising in the near term.

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