Just a few days ago we wrote about how the International Energy Agency has recently been concerned about the profound implications of the recent jump in oil prices on the global economy.
Oil prices have been rising for weeks, surging 26% since September. Now oil prices have risen over $100 a barrel. It’s the first time this has happened since July. As I write, the price of benchmark West Texas Intermediate crude is sitting at $101.71.
Concerns over a dip back in U.S. recession had seen oil prices fall back off the April high of $113.93, but recent economic data has indicated that U.S. citizens are spending more and U.S. manufacturing activity has increased.
Added to this, Iran, the forth largest oil exporter in the world has been suspected by the United Nations of developing nuclear weapons. This could lead to trade sanctions, and has already drawn military posturing from Israel. This situation could lead to a major disruption in the flow of oil.
Additionally, oil production in Nigeria, which is one of the top five oil exporters to the United Sates, has also been disrupted by oil spills and sabotage. The supply of oil to the U.S. has been dropping and demand has been increasing, which has led to rises in price.
Image CC licensed by US Army Corps of Engineers: oil tanker