Oil price rose to over $120 per barrel on 30th May in key hubs. The rise in prices for diesel and petrol threatens further price increases in the next two months. Some factors resulting in this situation are climate change and the lingering challenges over Russia's crude oil supply.
In any case, Brent crude rose to $120.50 while the West Texas Intermediate benchmark rose to over $116 per barrel. The rise in crude oil price occurs due to refined product supplies like petrol maintaining tight demand in most delivery hubs. Most countries are at risk of encountering the crisis, including the US. Besides, the low Russian diesel exports due to bans worsening the condition.
On the other hand, the Europe gas oil contract for distillates & diesel is trading at about $1200 per ton. The sky-high fuel prices have subjected motorists to higher prices for gasoline & diesel. However, crude oil has maintained its all-time high price of about $147.50 per barrel since 2008. The rise in prices occurred on Monday during the kickoff of the Memorial Day holiday.
Experts say that government subsidies and the easing of Covid-19 restrictions have helped withstand the demand. Although record-high prices might appear within local currencies, government intervention through subsidies can help maintain the market. Also, post-Covid-19 challenges and the approaching summer driving season in Europe cause a high mobility rate.
Due to the stiff pressure on the market, oil traders pay a premium to help secure supplies quickly because of the market tightness. July Brent delivery is trading at about a $4 premium over August. Global economy analysts are also concerned about EU restrictions or embargoes on the Russian oil trade.