Oil prices are on track to reach $100 a barrel this month for the first time in 2023 after surging by almost 30% since June, after Russian and Saudi Arabian production cuts and rising demand from China.
Oil prices hit a 10-month high on Friday and posted a third weekly gain as supply tightness spearheaded by Saudi Arabian production cuts combined with optimism around Chinese demand to lift crude.
Brent crude futures rose 23 cents, or 0.3%, to settle at $93.93 a barrel, while U.S. West Texas Intermediate futures was up 61 cents, or 0.7%, to close at $90.77 a barrel.
Both contracts traded at 10-month highs on Tuesday for the fifth consecutive session, and gained about 4% on a weekly basis.
Petrol and diesel prices in the UK have begun to rise modestly, adding 10p to the cost of a litre since June.
The motoring organisation RAC said the average price of unleaded fuel was £1.52 a litre on Friday, up from £1.43 in June.
Earlier this month, Saudi Arabia extended 1.3m barrels per day (bpd) of combined cuts to the end of the year, accelerating a drawdown in global inventories.
Supply cuts by Russia to boost prices have also supported efforts by other Opec countries to push prices towards $100 a barrel.
The International Energy Agency (IEA) warned last week that the ongoing supply cuts made by these two Opec+ leaders would create a “significant supply shortfall”, which poses a considerable threat to ongoing price volatility.
The report was released just a day after Opec announced that the market was facing a deficit of more than 3million bpd in the upcoming quarter, potentially resulting in the most substantial supply shortage in more than a decade.
FTSE 100
The UK's top share index, the FTSE 100, was down 10-points at 7,701 shortly after opening this morning, following Friday's 38-point rise.
Brent crude futures were up 0.29% at $94.20 a barrel.
Companies reporting today
- Phoenix Group Holdings (Half-year results)
- HgCapital (Half-year results)