The ‘Crude’ Question: Despite restricted supply, can oil sustain at $100/bbl?

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Also Read: ‘Crude’ impact on economy: $10 rise in Brent widens India's CAD by 0.5%, say analysts as oil sizzles to 10-month high Oil prices are expected to trade higher and can touch above $95, but market analysts reckon that prices sustaining above $100 is questionable. ‘’Markets fear that this trend could spur more cooling in the US economy, potentially denting crude demand,'' said domestic brokerage firm Motilal Oswal. US fuel demand is also expected to cool in the coming months, with the end of the travel-heavy summer season.

Biden administration is keen to keep pump prices in check ahead of the presidential election next year, where inflation and fuel costs have already become areas of attack for Republican party, according to the brokerage firm. Earlier this month, oil producers Saudi Arabia and Russia extended their voluntary oil output cuts of a combined 1.3 million barrels per day (bpd) to the end of December 2023. These are on top of the April cuts agreed by the Organisation of Petroleum Exporting Countries and its allies (OPEC+) running to the end of 2024.
-Even though higher oil prices would help Saudi Arabia balance its budget and Russia fund its war machine, triple-digit oil prices could cause US shale producers to increase their supply to lower prices.

Also, higher prices could drive more investment into clean energy. -The total US crude oil inventories, including the Strategic Petroleum Reserves (SPR), just fell below 800 million barrels. Refilling the SPR would involve either buying expensive oil or a large drop in oil prices.