Oil at $100? Will oil prices hit a century this summer as a global shortage takes hold?
oil jumped above $90 a barrel just days ago, military tensions between Israel and Iran were the immediate trigger. But the rally’s foundations went deeper — to global supply shocks that are intensifying fears of a commodity-driven inflation resurgence.
A recent move by Mexico to slash its crude exports is compounding a global squeeze, prompting refiners in the US — the world’s biggest oil producer — to consume more domestic barrels. American sanctions have stranded Russian cargoes at sea, with Venezuelan supply a potential next target. Houthi rebel attacks on tankers in the Red Sea have delayed crude shipments. And despite the turmoil, OPEC and its allies are sticking with their production cuts.
It all adds up to a magnitude of supply disruption that has taken traders by surprise. The crunch is turbocharging an oil rally ahead of the US summer driving season, threatening to push Brent crude, the global benchmark, to $100 for the first time in almost two years. That’s amplifying the inflation concerns that are clouding US President Joe Biden’s reelection chances and complicating central banks’ rate-cut deliberations.
For oil, “the bigger driver right now is on the supply side,” Amrita Sen, founder and director of research at Energy Aspects Ltd., said in a Bloomberg Television interview. “You have seen quite a few pockets of supply weakness, and demand overall on a global basis is healthy.”
Oil shipments from Mexico, a major supplier in the Americas, slid 35% last month to their lowest since 2019 as President
