Iran nuclear talks and EU embargo on Russian oil fuel oil supply concerns
The price of oil is moving higher in international markets today, as talks on Iran’s nuclear program face obstacles while an embargo on Russian oil draws closer by the day.These two reasons are further reducing the supply of black gold which is trying to meet the still strong global demand. Brent futures were up $1.42, or 1.5%, at $94.30 a barrel. WTI futures were up $1.37, or 1.6%, at $88.20 a barrel.
The Oil supply is decreasing
Prices were little changed last week as gains from production cuts decided by OPEC+ members were offset by lockdowns in China, the world’s top crude oil importer. At the same time, France, Britain and Germany announced that they have “serious doubts” about Iran’s intentions to revive the nuclear deal, a development that is likely to keep Iranian oil off the market and keep global oil supply at tight levels.
Oil Prices may rise at the end of the year
Analysts estimate that oil prices may rise at the end of the year as supply is expected to tighten further when the European Union’s embargo on Russian oil takes effect on December 5. The G7 will impose a price cap on Russian oil to limit Russia’s oil export earnings after its invasion of Ukraine in February, and plans to take steps to ensure oil could continue to flow to emerging economies .
On the other hand, oil demand from China could shrink for the first time in two decades this year as Beijing’s zero traffic policy keeps people at home and cuts fuel consumption.
Finally, the European Central Bank and the Federal Reserve are preparing to raise interest rates further to tackle inflation, which could boost the value of the US dollar against currencies and make oil more expensive for investors holding other currencies except the Dollar.