The oil price increased by around $2 per barrel on Tuesday from a nine-month low, helped by supply restraints in the American Gulf of Mexico ahead of Hurricane Ian and a weakening of the currency from its highest point in two decades.
Analyst predictions of potential supply cutbacks from the Organization of the Petroleum Exporting Countries and Allies (OPEC+), which will meet to decide policy on October 5, supported prices. Brent crude increased $2.21 or 2.6% to close at $86.27 a barrel. It dropped to $83.65 on Monday, the lowest level since January. WTI crude for the United States finished the day at $78.50, up $1.79 or 2%.
Why Are the Prices Hiking?
The ferocious hurricane cut down around 11% of oil output in the U.S. Gulf of Mexico as it barreled into Florida, according to U.S. offshore oil companies, who said they were monitoring Hurricane Ian’s progress. Oil prices may only see a brief respite due to the disruptions. Yawger predicted that the barrels would return very quickly and noted that there was a remote possibility that the storm’s direction may shift and result in more shut-ins.
B.P. (NYSE: B.P.) Plc said the storm didn’t threaten its Gulf of Mexico assets, and it redeployed staff to oil platforms after shutting down some of its offshore crude output. After Russia invaded Ukraine in February, crude prices skyrocketed, with Brent approaching its all-time high of $147 in March. Recent concerns have included those of a recession, rising interest rates, and a strengthening dollar. According to oil trader PVM’s Tamas Varga, financial forces are now affecting the price of oil.
Oil was also supported by the U.S. dollar, which had fallen from a 20-year high. Crude is more expensive for buyers using foreign currencies when the dollar is high. The recent decline in oil prices has fueled anticipation that OPEC+ may act. On Monday, the oil minister of Iraq said the group kept an eye on prices and did not want a sudden rise or decline.