Today, Wednesday, September 18, 2024, global oil prices witnessed a significant rise after their decline the previous day, as the price of a barrel of Brent crude recorded $ 73.16, while the price of a barrel of US crude reached $ 72.77. This rise is driven by several key factors affecting oil markets. According to the report from the Ministry of Petroleum and Mineral Resources, the rise in oil prices today is mainly related to signs of a possible rate cut by the US central bank. This points to a shift in monetary policy that may affect global economic activity, as a rate cut is expected to stimulate economic growth and increase demand for oil. This forecast boosts oil demand And it leads to higher prices. Moreover, the report notes that the situation in the Middle East plays a large role in price fluctuations. There is an increasing likelihood of further violence in the region, which could disrupt supplies from one of the main production areas .The report also added that oil prices rose by about one dollar a barrel yesterday, driven by supply disruptions in the United States as a result of Hurricane Francen , which affected the country’s production and refining infrastructure. The United States is the world’s largest oil producer, and any disruptions in its production could significantly affect global prices. In the same context, markets are awaiting the impact of the first rate cut by the US central bank in four years. It is believed that this cut will have a positive impact on global oil demand, as it boosts the activity of the economy and increases consumption, contributing to supporting prices.
How high oil prices are affecting the global economy
High oil prices have multiple and complex effects on the global economy and financial markets. Oil is one of the most important natural resources that significantly affect economic activity, due to its vital role in supplying energy to industries, transportation and heating. When oil prices rise, this increase is reflected in various aspects of the economy and finance, leading to a range of economic and social impacts. First, higher oil prices affect production and transportation costs. Companies that rely heavily on oil as their primary input into their operations, such as transport companies and heavy industry, will face an increase in production costs. This increase in costs may lead to higher prices for consumers, causing inflationary pressure. When prices of goods and services rise, the real income of individuals decreases, which can lead to a reduction in incomes consumer. This impact could weaken economic growth, as households reduce their spending on non-essential goods. In addition, companies that rely on oil as a major component of their production are affected by rising prices. These companies may have to pass on the increase in costs to consumers by raising the prices of their products. This scroll may affect the purchasing power of individuals and increase inflation. Companies may also face financial pressure if they cannot adjust the prices of their products in line with the increase in oil costs, which can affect on its profits and financial stability. On the other hand, higher oil prices could have positive effects on some economies. Oil exporters, such as OPEC members and Russia, benefit from higher prices as their revenues from oil exports increase.
The impact of supply disruptions on oil markets
Supply disruptions in the United States play a pivotal role in influencing global oil markets, given that the United States is one of the world’s largest oil producers and consumers. When oil supply disruptions occur in this country, they can cause significant changes in global market dynamics, affecting oil prices, global economies, and international trade. First, the United States is the world’s largest oil producer after a significant expansion in its shale oil production. Any supply disruption, whether due to natural disasters such as hurricanes, technical problems with production facilities, or even infrastructure issues, can reduce the amount of oil produced and pumped to global markets. This supply shortfall from the largest oil producer could cause Oil prices are rising globally, as demand for alternative sources of energy is increasing while supply is shrinking. When the United States experiences disruptions in oil supply, these disruptions can lead to disruptions in global oil markets. Oil-importing countries and economies that rely on U.S. oil as their main energy source have to look for alternatives, creating pressure on supplies from other countries. These pressures may lead to higher oil prices in general, as countries race for alternative supplies, raising prices in global markets. The next impact of supply disruptions in the United States is reflected in their impact on oil markets in the short and long term. In the short term, significant volatility in oil prices may occur as a result of concern about supply shortages. This can lead to an increase in the price of oil futures, as traders try to secure supplies at higher prices as a hedge against potential risks.
