Oil Prices Soared to Their Two-Year High; Gasoline Rises Too

The oil prices have increased due to higher-than-expected U.S. inflation data and strong demand prospects.

After the United States lifted sanctions on a former Iranian oil, New York futures plunged 1.8% early on Thursday.

Crude oil gained support when the U.S. consumer price index was higher than expected in May, prolonging months of inflation accumulation. At the same time, the structure of the oil market has been strengthened amid signs that demand is recovering. Besides, chances of global supply getting lower than expected are increasing.

According to analysts, the outlook for oil demand remains strong, and it is getting stronger. As a result, the commodity sector has an inflationary pulse, and crude oil is an essential participant as a primary hedge against inflation.

The Crude Oil Price Is Still More than 40% Higher This Year

OPEC predicts that the recovery in global demand will accelerate in the second half of the year. However, the organization’s idle capacity buffer and its allies are still lower than the 80% on paper. OilX analysts also marked “several signs” in their data, indicating an unexpected decline in the global oil supply. It reflects the combination of a reduction in mature oil fields and postponement of maintenance until this year.

The United States announced the lifting of sanctions on some people. It including the former managing director of the Iranian National Petroleum Corporation.

As a sign of broader market strength, recent futures contracts have risen more than the gains in the following months. For example, the instant spread of Brent crude oil closed at its highest level since April on Thursday. It rose to more than 50 cents per barrel. This structure indicates a tight supply in the Atlantic Basin.

At the same time, the long-term debate on the feasibility of oil investment continues. The leaders of the Group of Seven nations are discussing plans to shift the balance of car purchases from gasoline. They tend to switch to greener cars by the end of the decade. It was the day before Shell said it would accelerate the reduction of carbon emissions.

Recent Gasoline Price updates

Gasoline prices have risen recently too. According to data from the American Automobile Association, the national average price has been increased. The price grew from US$2 per gallon last year to US$3 per gallon on June 9.

In a news article, the Automobile Association said that the U.S. Energy Information Administration (EIA) reported the demand drop from 9.48 million barrels per day to 9.15 million barrels at the end of May 28. As the U.S. refinery utilization rate rises to 88.7%, this is the highest level since February 2020.