Oil Prices Surge Amid Supply Fears

Oil prices continued their upward trajectory, hitting fresh five-month highs on Tuesday. Market analysts attribute this surge to a combination of factors, including escalating tensions in the Middle East and potential supply disruptions from Mexico.

Brent crude touched $88.3 per barrel, marking a weekly gain of 3.3% and a significant 7.7% increase throughout the month. Meanwhile, crude oil prices rose 1%, reaching $84.6 and demonstrating a weekly gain of 3.8% and a monthly rise of 8.4%.

Factors Behind the Upward Trend

• Middle East Tensions: The recent Israeli airstrike on an Iranian embassy in Syria has amplified fears of regional conflict, a key factor known to drive oil prices higher.  The ongoing conflict between Israel and Hamas, along with attacks in the Red Sea, further disrupt oil and gas shipping channels, leading to delays and alternative routes that increase costs.
• Supply Concerns:  Mexico's state-owned oil company, Pemex, has announced plans to reduce exports, tightening global supply.  Coupled with  OPEC+'s extended production cuts, this contributes significantly to the upward price pressure.
• Economic Indicators: Positive manufacturing data from China and the US signal potential demand growth, fueling optimism in the oil markets.

The oil price rise has had a notable impact on the FTSE 100, which crossed the 8,000-point mark.  According to Russ Mould of AJ Bell,  "The ongoing rise in oil prices amid a tighter supply outlook is a worry for corporates and consumers as it is a major inflationary force."

OilPrice.com analyst Syed Muhammad Osama Rizvi highlights the bullish sentiment in oil markets, fueled by factors such as OPEC+'s commitment to production cuts, signs of global economic recovery, and geopolitical tensions.

The upcoming OPEC ministerial meeting on April 3rd will be closely watched as it provides insight into production targets and market dynamics. China's economic trajectory continues to be a significant factor influencing oil demand and price trends.