Oil Prices Hit 10-Month High
Yesterday, September 18th, the price per barrel neared $95, reaching a new 10-month high. This increase is up from $72 a barrel at its lowest in June, this difference marks the largest jump since Russia’s invasion of Ukraine. Rising crude oil prices directly impact higher prices at the gas pump, one of the most visible hallmarks of inflation.
On Monday, the nationwide average cost of a gallon of unleaded gas was $3.88, which is 10 cents higher than it was this time last year. OPEC and its allies have cut production by up to 2.5 million barrels per day so far this year, in addition to Saudi Arabia and Russia cutting 1 million and 300,000 barrels per day respectively. Earlier this month, Saudi Arabia also decided to extend this latest cut through December. This latest jump in energy prices has the potential to undo some of the progress made by central banks to fight inflation, which reached record highs in 2022.
Although prices fell earlier this year, the continued Russian Invasion of Ukraine and the global recovery from COVID-19 lockdowns have caused crude oil prices to reach this new 10-month high. Last week, the International Energy Agency (IEA) warned that the ongoing supply cuts made by Russia and Saudia Arabia would create a significant supply shortfall, which poses a very serious threat to ongoing oil price volatility. The IEA has also predicted at this point, that demand for oil will peak before 2030.
The Biden administration has been monitoring the situation throughout the summer and plans to wait and see how gas prices recover on their own now that the travel and driving season is coming to an end. The administration’s struggle to keep a lid on gas prices, despite slowing their reliance on OPEC oil, has been campaign fodder for GOP hopefuls as election season nears. Presidential hopefuls like former Vice President Mike Pence, former Gov. Nikki Haley, and Sen. Tim Scott (R-S.C.) have all criticized the White House for their handling of rising gas prices, and have campaigned on bringing energy production back to America.
Constitution Partners is monitoring the situation and will provide updates as they develop. Read more from CNN Business here.