The global inflation was expected to further increase as oil prices were about to reach $100 a barrel in September for the first time in 2023, owing to Russian and Saudi Arabian production cuts and rising demand from China, The Guardian reported.
The oil prices have surged by almost 30% since June. In Pakistan, the petrol and diesel rates have been increased by Rs58.43 and Rs55.83 per litre within one month. The two petroleum products, which are now available at Rs331.38 and Rs329.18, have become costlier by 20% since the interim government held the reins in August.
Brent crude, the oil price benchmark, rose to a 10-month high last week of almost $94 a barrel, up from $72 a barrel at its lowest point in June. It would be the biggest quarterly increase since Russia attacked Ukraine.
The lighter US crude, West Texas Intermediate, has climbed from $67 a barrel to $90 a barrel over the same period. Both benchmarks were up by about 4% on the week.
In the United Kingdom, the two petroleum products prices have started to increase in a moderate manner as 10 pence has been added to the cost of a litre since June. The average price of unleaded fuel was £1.52 a litre on Friday, up from £1.43 in June, said the UK’s motoring organisation RAC.
While in the US gasoline has jumped by over 10% to $3.90 a gallon (3.8 litres).
The Energy Information Administration has seen a whooping increase in jet fuel prices after an increase in demand for flights in the US, Europe, and China. Prices were up by 50% from a recent low of $2.05 in early May.
Earlier this month, Saudi Arabia extended 1.3 million barrels per day (bpd) of combined cuts to the end of the year.
Supply cuts by Russia to boost prices have also supported efforts by other OPEC countries to push prices towards $100 a barrel.
The International Energy Agency has warned of supply shortfall after the recent supply cuts.
“Oil’s wicked ripper is showing few signs of abating just yet,” Stephen Innes, a managing partner at SPI asset management, said.
A drop in oil prices played a large role in the fall of inflation in the first half of this year, but was expected to act as a brake in the second half and into 2024.
Policymakers were of the view that further hike was under consideration amid the European Central Bank’s decision to increase interest rates last week.
The Federal Reserve of US has signalled that the door remained open for a possible final increase in November.