(Analysis) Tensions between Israel and Iran, alongside global supply disruptions, are driving oil prices toward the $100 mark.
Mexico’s decision to slash crude exports is tightening the global oil market, forcing U.S. refineries to tap more into domestic reserves.
U.S. sanctions on Russia, along with potential actions against Venezuela, are causing delays in oil supply.
Houthi attacks on Red Sea tankers further exacerbate these delays, despite OPEC and its allies reducing production.
As these disruptions drive oil prices higher, concerns about inflation increase with the upcoming U.S. summer season.
These rising prices also pose risks to President Joe Biden’s reelection prospects and could influence central bank monetary policies.
Observers point to the supply shortage as a key driver amid strong global demand. This imbalance is pushing oil prices higher in the market.
President López Obrador’s efforts to lessen Mexico’s dependence on imported fuels have shaken the oil market.
His policy has elevated the price of Mars Blend crude above that of West Texas Intermediate (WTI).
Oil’s Climb Toward $100: Global Tensions and Supply Cuts
Production cuts by Mexico, the U.S., Qatar, and Iraq, surpassing one million barrels daily in March along with global supply limits, are boosting the oil market.
As demand exceeds supply for the first time since 2021, the market tightens, aligning with U.S. refineries preparing for summer demand.
The rising prices test the Biden administration’s plans to refill the U.S.’s emergency oil reserves and raise political risks due to ongoing high food and energy costs.
This scenario might prompt a surge in U.S. inflation, possibly influencing the consumer price index in March.
The sustained high prices of oil might lead OPEC+ to reconsider their current production cutbacks.