by Brian Swint
Oil prices continued their upward trajectory on Tuesday, as signs of tightening supply and steady demand boosted market sentiment.
The international standard, Brent crude, increased by 0.9% to $95.26 per barrel, while the U.S. benchmark, West Texas Intermediate (WTI), climbed 1.5% to $92.86 per barrel. These prices reflect a significant increase of approximately 25% over the past three months.
This surge in prices can be attributed to voluntary output cuts announced by Russia and Saudi Arabia; both countries have agreed to extend these cuts through the fourth quarter. In fact, Chevron's Chief Executive Officer, Mike Wirth, predicted in an interview with Bloomberg television that prices could potentially reach $100 per barrel.
However, this scenario poses a potential challenge for the Federal Reserve as it seeks to curtail inflation by raising interest rates. In light of current developments, it is widely expected that the Fed will pause its rate hikes at its upcoming meeting this week.
Despite concerns over a sluggish economic outlook in Europe and China, which could potentially impact oil prices in the coming months due to decreased demand for energy, supply concerns are currently outweighing those worries.
Overall, the resurgence of oil prices has generated optimism in the market, with supply constraints and sustained demand acting as major catalysts for this ongoing upward trend.