OilPrice: an uncontrollable rise in oil prices has begun

16 September 2023

There appears to be no end in sight to the current oil price rally, nor to the catalysts driving it, as a severe tightening of global supply coincides with the apparent return of strong commodity demand growth in China. At the intersection of these factors, an uncontrollable rise in oil prices began. This opinion was expressed by OilPrice resource analyst Michael Kern.

This landmark event was largely facilitated by a series of positive macroeconomic data in the Middle Kingdom, where both industrial production and retail sales grew by 4,5-4,6% year on year, significantly exceeding analysts' expectations. With Chinese refinery output hitting a record high of 15,23 million barrels per day in August, China has gone from being a 2021-2022 underperformer to becoming the biggest driver of oil prices. That boosted optimism on overall demand even as both Europe and the United States struggle to maintain their refineries.

According to Kern, previously unrelated events came together and created a strong effect putting pressure on quotes. In addition to the above, one can also mention the factor of suffering logistics. Panama Canal authorities have warned they could further reduce the maximum number of daily transits, currently just 32 ships a day, if this year's unprecedented drought continues to impact the waterway, which accounts for 5% of global trade.

All this gives us the right to say with confidence that the rise in oil prices on a global scale has just begun, and it is not yet possible to predict the end of the rally and the final price configuration. The only thing that experts undertake to say is that it will overcome the threshold of $100 per barrel, which is possible in the very near future.

Analysts also handed out awards in advance for the winners of the price rally - Russia and Saudi Arabia (frankly speaking, these countries pursued this goal when starting their cuts), and the United States was named the losing party, since rising prices for raw materials caused a collapse in the cost of gasoline and further the chain associated negatives: increased inflation and the expected additional increase in the Fed key rate.

Photos used: freepik.com

13 comments

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Offline Vladimir1155

Vladimir1155 (Vladimir) 16 September 2023 08: 16

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it is obvious that oil and other real assets can rise in price in principle, however, I would pay attention to the other side of the issue, at the other end of the stick, namely the depreciation of the dollar and euro in which the price of oil and real assets is calculated,... from the 14th Russia is dumping dollars tenfold, China rushed to buy gold, Saudi Arabia saw through the US plans to start bloody wars in the Middle East like Russia, Ukraine, between Iran and Saudi Arabia, between Yemen, etc.... real financiers and governments at least a little those who care a little about their countries have long been dumping Western unbacked currency, and the West is increasing the printing of unbacked pieces of paper and fictitious non-existent money from banks, the only question is when quantity will turn into quality and they will not give anything at all for a dollar, but will give in the face..... connections are already being built in Brix that do not need dollars and euros, the whole world no longer needs America, due to growing domestic demand in China and other countries of the world... the 300 billion stolen from the Russian Federation will cost America dearly dollars, now the world doesn’t trust America
1. Offline strange guest
  
  strange guest (Strange Guest) 16 September 2023 08: 32
  
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  The funny thing is that even IF the United States defaults, it will not be the United States that will suffer more, but its creditors) And the States will simply get rid of the national debt)
Offline prior

prior (Vlad) 16 September 2023 08: 28

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an uncontrollable rise in oil prices began

“Well, maybe he’ll trample now...” thought the pensioner.
And indeed, prices for everything have gone up uncontrollably.
Offline twice-born

twice-born (Unknown) 16 September 2023 08: 30

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Once again, gasoline prices will rise even more, the dollar and prices will go down!
Offline strange guest

strange guest (Strange Guest) 16 September 2023 08: 35

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We'll live a little more. Just like when oil cost 140. In 2008. The dollar will again be worth 25 rubles and everything will become 4 times cheaper. Eh, good!!!
Offline strange guest

strange guest (Strange Guest) 16 September 2023 09: 01

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In general, this is very sad. Oil is again at 100 bucks per barrel and at the same time they give 1 rubles for 100 dollar. The last time oil cost more than 100, the dollar was 27-28 rubles. And here they are talking about the devaluation of the dollar. People, ah! Look at the dynamics of the ruble over the last 10 years... And, for example, the dirham. As it cost 1 dirhams for 4 buck 10 years ago, so it costs now... If the dollar is weak, then the ruble is generally in a wheelchair..
1. Offline trampoline instructor
  
  trampoline instructor (Cotriarch Peril) 16 September 2023 10: 18
  
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  Look at the dynamics of the ruble over the last 10 years.
  
  Russia, in order to fill the treasury and reduce the budget deficit to a minimum, is devaluing its national currency. Here we need to look not at 10 years, but at the last 25-30.
  1. Offline strange guest
    
    strange guest (Strange Guest) 16 September 2023 10: 31
    
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    So what? Let's look at 100 right away.
    
    Compared to 1913.
    
    That’s the problem..(that other countries manage to do this without depreciating their currency.
Offline Sergei Fonov

Sergei Fonov (sergey fonov) 17 September 2023 17: 20

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Western banks are also happy; the more and more expensive Russia sells oil and gas, the more dollars and euros it will leave in Western banks. Why the government does this with the income that needs to be used to build the economy is unclear, or rather it is clear to everyone, but those on whom the development of the country depends do not notice anything. No GDP will save us if profits are left to the West.
Offline anyname

anyname (any name) 17 September 2023 18: 21

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It should also be recalled that the US oil reserves remain for half a year. But these were essentially reserves in case of a long war. If a war starts tomorrow, and tankers no longer go to the United States, then in another week all transport in the United States will stop. And a week later, parts will be needed that cannot be delivered. Let them switch to a steam engine.
Offline Eh Vasily

Eh Vasily (Cot Vasca) 17 September 2023 19: 24

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Quote: Strange guest
In general, this is very sad. Oil is again at 100 bucks per barrel and at the same time they give 1 rubles for 100 dollar. The last time oil cost more than 100, the dollar was 27-28 rubles. And here they are talking about the devaluation of the dollar. People, ah! Look at the dynamics of the ruble over the last 10 years... And, for example, the dirham. As it cost 1 dirhams for 4 buck 10 years ago, so it costs now... If the dollar is weak, then the ruble is generally in a wheelchair..

If you produce nothing except oil, then of course it is better that the dirham is stable against the dollar, because you buy everything else for these dollars, but if you have production, it will be competitive only if your costs are lower than others ! This is precisely why the ruble is being weakened so that domestic products are cheaper than imported ones. If someone doesn’t understand this, then most likely he doesn’t see the world beyond his own trough)))
1. Offline strange guest
  
  strange guest (Strange Guest) 17 September 2023 20: 17
  
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  Either the domestic Moskvich is cheaper than the imported JACa)
2. Offline strange guest
  
  strange guest (Strange Guest) 17 September 2023 20: 20
  
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  And your product will be competitive not when it is cheaper than others, but when it is of better quality. Although for some who are in the trough, quality is unimportant) as long as it’s cheaper))