Despite falling to a nine-month low, Brent Crude prices started to recover as the approach of Hurricane Ian prompted operators in the US Gulf of Mexico—such as BP and Chevron, the owners of the Castrol and Texaco lubricant brands—to stop production.
This year saw the price of Brent Crude almost break its all-time record of $147 per barrel, fuelled mostly by supply concerns in the wake of Russia’s invasion of Ukraine, but prices have since fallen as concerns about high interest rates and an economic slowdown took over. The growing strength of the US dollar has also exerted downward pressure on oil prices, as a strong dollar makes oil more expensive for traders buying in other currencies.
Oil recently fell below $85 per barrel, the lowest it has been since January, but it has since bounced back a little as the US dollar softened slightly and Hurricane Ian threatened to disrupt production.
Oil broker PVM’s Tamas Varga said the rally in price could be short-lived, however:
“Oil is currently under the influence of financial forces. In the meantime, relief rallies, like the one this morning caused by Hurricane Ian in the U.S. Gulf, are viewed as temporary phenomena.”
Analysts now expect that the OPEC+ group could soon make further production cuts to avoid a further drop in oil prices. The oil minister of Iraq recently indicated that the group was observing prices with a view to preventing any sharp increases or declines.
