The United States recently rebounded from previous losses after imposing sanctions on Iran. Energy markets now remain concerned about price increases resulting from scarce supply, Reuters reported.
"Once you raise rates that high also and you know it’s going to happen for next month, a lot of retail customers have a tough time trading once you start increasing their costs of trading," director of energy futures at Mizuho in New York, Robert Yawger, said, according to Reuters.
Interest rate increases taking place in the United States, Britain and Switzerland have lowered the value of the market, raising concerns among experts about a potential delay in global economic growth.
According to a Reuters report, analysts believe the decision made by “the United States to impose sanctions on Chinese, Emirati and Iranian firms that help export Iran's petrochemicals boosted buying, as it underscores the difficulty of a revival of the 2015 U.S.-Iran nuclear accord.”
Bent crude futures recently saw a decline of 45 cents, 0.4% to $118.07. On the contrary, West Texas Intermediate (WTI) crude futures rose up by 27 cents to $115.55 a barrel.
Libya’s oil output has also declined to 100,000-150,000 barrels per day, reflecting only a fraction of the 1.2 million bpd recorded last year.
“Analysts remain concerned that the country could have ongoing problems delivering oil amid unrest,” the Reuters report read.
Prices skyrocketed by more than 2% overnight following the U.S. Federal Reserve key interest rate raise of .75%, the largest spike recorded since 1994. The International Energy Agency estimates its demand to rise further in 2023, bringing the total projected sum to a record 101.6 million bpd.
European stocks also took a loss recently after the Swiss National Bank unexpectedly imposed a rate hike, followed by the Bank of England.
Bernstein projects global inventory levels to be at 48 days of demand cover, which reflects a decrease from the long-term average period of 55 days.
"Looking into next year, there is a clear deficit in supply,” the analyst notes. “While a recession could yet come along to change this, the current set-up remains bullish for the oil price and oil stocks.”
Experts in the industry are hopeful demand will rebound, and prices will decrease as China loosens its COVID-19-related restrictions.