Current Oil Prices Reflect a 30% Rise since June

The crude oil futures prices moved above $114 per barrel due to worries that Tropical Storm Isaac could disrupt production of oil by the US while the possibility of additional financial stimulus from the Federal Reserve continues to be widely speculated.

Supply reductions have been a factor in pushing crude prices since June higher by almost 30%, largely driven by sanctions affecting the exports of Iran and issues impacting the flow of North Sea oil.

The crude futures prices of Brent gained $1.04 to $114.63 per barrel. Meanwhile, the crude price of the U.S. benchmark inched up by a dollar to $97.20.

Tropical Storm Isaac has moved into the Gulf of Mexico and meteorologists predict that it will cause a short-term closing of almost 85% of the offshore oil output capacity of the U.S. Eugen Weinberg, Commerzbank’s commodities research head, said that the storm may be helping (prices), but there is more general sentiment awaiting what the Jackson Hole meeting will do to commodities.

Economists and bankers are set to meet soon for the Jackson Hole meeting in Wyoming where Ben Bernanke will address the nation and the markets in a highly anticipated speech about the state of the global economy. The Fed Chairman told a Congressional panel in writing that the agency may offer additional financial stimulus to strengthen the country’s economy.

Moreover, the markets will watch for policy clues from Europe before its Central Bank meets on September 6. Unrest in Syria and political disputes about the alleged nuclear program of Iran have helped increase per barrel oil prices for the summer season even if they are still lower than $117.03, the highest level reached in August.

Moreover, other inventory concerns are pushing Brent prices up.

Delayed pipeline construction in Iraq has threatened to slow down Royal Dutch Shell’s Majnoon oil field production for not less than three months and will force it to miss its target for the present year of 175,000 barrels daily.

In Norway, workers in the oil services sector recently started wage discussions with oil companies, leading the industry to the brink of its second strike in two months. The vital oil sector of Norway was restricted in the past month when workers staged a 16-day strike regarding pay and early retirement rights. At the time, the strike caused the per barrel oil prices to increase until it was temporarily resolved.

Current gasoline prices in the United States also moved up following an explosion and fire at the Amuay plant, Venezuela’s largest refinery that processes more than 645,000 oil barrels daily.

A factor that can stop these price gains in the current oil prices is the release of strategic oil reserves by Washington in conjunction with the IEA. The agency’s chief, who recently rejected the need for release, seems to have recently consented to the idea according to the Petroleum Economist journal.

The White House was considering its prior plans of potentially releasing its oil reserves due to fears that the rising current oil prices could weaken the impact of Iranian sanctions.