Crude Oil Hikes to $123.21 a Barrel on Tuesday

Brent crude oil, rose 0.9 percent to $123.21 a barrel on Tuesday, owing to concerns about global supply shortages and other uncertainties.

Crude Oil Hikes to $123.21 a Barrel on Tuesday

The price appreciated on reports that OPEC and allies are struggling to deliver on pledged production increases because of the Russian crude oil sanctions.

Saudi Arabia and the UAE are the only members that have any room to increase production but the extra production from the two Middle East producers was offset by an even greater decline in production from Libya, Nigeria, and Iraq.

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Other concerns, such as increased COVID-19 infections, slower global growth, and OPEC+ countries’ inability to reach output targets, continue to cloud the oil outlook.

Consumer price inflation accelerated to 8.6% in May, according to US Labor Department statistics issued on Friday, opening the door for speculation of an even larger basis point hike, which is driving down oil prices.

UBS Group AG, a renowned global investment bank and financial services company, raised its Brent price forecast to $130 per barrel for the end of September and $125 for the fourth quarter, up from $115 previously projected.

The bank said, “low oil inventories, dwindling spare capacity, and the risk of supply growth lagging demand growth over the coming months have prompted us to raise our oil price forecast.”

The American Petroleum Institute (API) recorded a crude oil increase of 736,000 barrels this week, compared to experts’ expectations of a loss of 1.2 million barrels.

The minor increase follows the release of 7.7 million barrels from the Strategic Petroleum Reserves by the US Department of Energy in the week ending June 10.

The market will be waiting for official US crude and fuel inventory data from the Energy Information Administration on Wednesday, which analysts expect to show a drop of 1.2 million barrels last week.