Joe Biden, the US president, came away from Middle East talks without an agreement on raising supply on Monday, causing oil to rise.
According to Biden, the expectation was that Saudi Arabia would fulfill a commitment to help solve global supply pressure problems by pumping more oil into the market.
However, Brent crude rose 2.6% to $103.88 (£86.91) on Monday following Saudi Arabia’s foreign minister, Prince Faisal bin Farhan Al Saud, to dismiss speculation over an output increase.
He said that in the US-Arab summit on Saturday, no oil issues were discussed, and Opec+ nations would continue to assess market conditions.
The chief market analyst at Avatrade, Naeem Aslam, has this to say: “The message is that it is Opec+ that makes the oil supply decision, and the cartel isn’t remotely interested in what Biden is trying to achieve.”
He further added, “Opec+ will continue to control oil supply, and one country alone cannot determine the oil supply – at least that is the message that traders have taken from Biden’s visit to Saudi Arabia.”
With oil prices rising, drivers will continue to face high gas prices at the pumps. As a result of the soaring prices, the government asked the Competition and Markets Authority to study the market, and its initial findings raise concerns about refinery margins.
The two countries pumping the most oil, Saudi Arabia and the United Arab Emirates, say they’re already at maximum production. Even with this thought of slower global growth in the horizon, the global oil supply is still enough to push the oil price to a dollar over $120 a barrel.
This picture against that backdrop makes gasoline prices in the US over $5 a gallon the first time, leading to tough inflation and harm to the US driver.
As a result of a potential decline in demand, oil prices have slipped recently, but on the physical markets, where traders actually buy and sell actual cargoes of oil, prices in northwest Europe are at 14-year highs.
As investors expect US interest rates to rise by three quarters of a point this month, and a patchy earnings season unfolds, energy markets are likely to be volatile in the weeks to come.
Copper, known as Dr Copper because it serves as an economic barometer, has fallen 25% since its March peaks.
It’s not just at the gas pumps; people in the energy industry are also watching how Europe responds to price spikes for fuel.
Gas storage is being filled up as countries race to ensure that Russia does not cut off supplies. This includes Nord Stream 1, which is currently shut down for maintenance.
Ineos, the chemicals company run by billionaire Jim Ratcliffe, was quoting Shell chief executive Ben van Beurden when he said that rationing could be implemented this winter.
“It looks pretty dire for this winter now, as to whether we’ll get to the targets we need for storage,” said Ineos CEO Brian Gilvary. “If Nord Stream 1 doesn’t come back, it is inevitable. We will definitely see rationing in Europe.”
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