Climbing crude oil heads for reckoning
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U.S. crude oil prices reached the highest level in seven years this week, amid supply disruptions and geopolitical jitters.
Why it matters: The climbing cost of crude — which is an input cost into virtually everything that is transported — will add to the inflationary pressures that are bedeviling politicians, policymakers and consumers.
What happened: On Monday, Yemen’s Houthi rebels used drones to destroy fuel tankers in the United Arab Emirates. The U.A.E. is OPEC’s third-largest producer.
- A fire-induced outage temporarily halted the flow of crude through a pipeline connecting Iraq to Turkey on Tuesday.
- Tensions between Russia — the world’s third-largest oil producer — and the west continue to build over Ukraine, with the U.S. on Thursday promising a “swift, severe” response to a military incursion.
What’s next: Analysts and traders are beginning to think that crude-consuming countries may move toward another coordinated release of strategic reserves to quell the rise in crude.
- President Biden said Wednesday, “There's going to be a reckoning along the line here as to whether or not we're going to continue to see oil prices continue to go up.”
Go deeper ... IEA: Oil is back and 2022 could be volatile
