Global prices rose on Monday to a four-year high, reaching $81.48 a barrel, the most since November 2014.
Brent crude futures traded at $81.08 a barrel, up 0.72% from Tuesday’s trading. Meanwhile, the Crude Oil WTI Futures for November rose by 0.46%, to reach $72.42 a barrel, almost hitting Monday’s $75.74 high, the highest level since July 8.
The main reason that pushed oil prices to new record levels lies in the fears and concerns surrounding the markets regarding a potential supply crisis, especially after the global producers, both within the Organization of the Petroleum Exporting Countries and outside producers decided not to go for any increase in production.
Markets were also concerned of the nearing US sanctions on Iran’s crude exports, and regarding Trump’s plans to cut Iranian crude shipments to zero through sanctions in November.
The Organization of the Petroleum Exporting Countries (OPEC) and Russia are still unable to take steps to offset the potential shortage of global supplies.
The meeting of the Organization of Petroleum Exporting Countries and non-OPEC countries, including Russia, ended with the participants not reaching any formal recommendations to for additional supplies to compensate for the shortage amongst markets caused by the decline in supplies in Iran.
US President Donald Trump said he would sell US supplies and strategic oil reserves if necessary to curb price hikes at the moment. Saudi Arabia’s energy minister, Khalid al-Falih, rejected Trump’s comments, saying, “I do not influence prices.”
On a separate note, gold prices rose during Tuesday’s trading session, as the USD declined just two days before the Fed’s meeting. December gold futures rose 0.12% to $1,205.
The dollar index, which measures the strength of the dollar against a range of major currencies, fell 0.21%, to trade at 93.68 points.
The yellow metal is expected to remain within a tight range even after the Federal Reserve’s announcement on Wednesday. Analysts believe that the Federal Reserve will raise interest rates this week by a quarter point and will provide some evidence on the future course of the monetary policy.
Higher interest rates increase bond yields, making non interest bearing gold less attractive to investors. They also tend to support dollar prices.
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