InvestorQ : Why has oil prices moved up so sharply in the world markets on Wednesday? Is there any specific reason?
indhumathi Sayani made post

Why has oil prices moved up so sharply in the world markets on Wednesday? Is there any specific reason?

Answer
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shrinidhi Rajan answered.
1 year ago


Actually, there are a number of reasons as to why the oil prices moved up sharply to above $67/bbl on 10th July up by more than 4%. Here are some of the reasons.

· There has been a hurricane hitting the Gulf of Mexico on the Southern coast of the United States. This area has a lot of oil refineries and many of them have shut down as a precautionary measure. This is likely to reduce supply.

· Just a couple of days back, UK had detained an Iranian oil tanker near the Strait of Gibraltar, which was allegedly carrying oil to Syria. This detention was done because Iranian oil is under sanctions. However, this has made relations between the UK and Iran frosty and added to the tensions in the Middle East.

· In addition, the US inventories and crude stocks reported a sharp fall of 9.5 million barrels in the week ending July 05th and that has also pushed up the oil prices. The fall was more than triple what analysts had anticipated.

Apart from the above factors, the supply constraints posed by OPEC and Russia extending their supply cut of 1.7 million bpd till March 2020 has also pulled up oil prices.