U.S. crude oil futures hit a milestone on Thursday, surpassing $90 a barrel for the first time since November 2022. West Texas Intermediate (WTI) crude rose 1.6% to hit a high of $90.26 midday. Meanwhile, Brent crude oil futures also rose, surpassing $93 a barrel.
This increase is not surprising given the steady rise in oil prices over the past three months. They have risen more than 30% since the end of June, driven by a combination of OPEC+ production cuts and unilateral production cuts by Saudi Arabia and Russia. These measures have led to a shortage of supply on the market.
Not only crude oil saw a price increase, but petroleum derivatives such as gasoline and kerosene also recorded significant price increases. Delta Airlines recently warned of lower profits due to higher maintenance costs and fuel prices. Other major airlines, including American, Spirit, United, Southwest and Alaska Air, have also recently issued similar warnings.
Rising energy prices, particularly gasoline, were a key factor in higher-than-expected inflation in August. In fact, gasoline prices accounted for more than half of the overall increase in the Consumer Price Index (CPI).
According to AAA, the average price of gasoline in the United States is $3.86 per gallon. This represents an increase of 6 cents compared to the previous week and an increase of 16 cents compared to the same period last year.
Unfortunately for drivers, relief at the pump is unlikely in the near future unless the price of crude oil falls. Experts expect gasoline prices to continue rising as long as crude oil stays above $90 a barrel.
These higher energy prices have a significant impact on both consumers and businesses, contributing to higher transportation and manufacturing costs. Investors should monitor these developments closely when making decisions regarding their portfolios.
