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Oil prices have risen sharply for the second consecutive week, prompting discussions of a possible rally. Over the past month, WTI crude reached $81.29 per barrel, and Brent closed at $85.63, marking over a 3% rise in just the last four sessions and a 5% gain in June.Â
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Supply concerns and geopolitical tensions drive the surgeÂ
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Two primary factors are fuelling this increase in oil price trends: a significant drop in US oil and fuel reserves and escalating tensions in the Middle East. Â
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The US has experienced notable declines in petroleum inventories, which has tightened supply and pushed prices higher. Â
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Meanwhile, heightened conflict in the Middle East, particularly Israel's recent military actions in Gaza and Hezbollah's threats to extend the conflict to Israel's allies, such as Cyprus, have added to market uncertainty.Â
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Economic policies are also playing a crucial role. Central banks in Europe, Switzerland, and Canada have recently cut interest rates to stimulate their economies, and there is speculation that the US Federal Reserve may follow suit in its September meeting. Â
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However, the latest US unemployment data showing a drop in jobless claims might influence the Fed to maintain the current interest rate range of 5.25% to 5.50%, contrasting with market expectations for a cut.Â
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Legal and environmental implications for future pricingÂ
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A recent landmark ruling by the UK Supreme Court could have long-term implications for the oil market. In a case against the Surrey County Council, the apex court ruled that the Council must consider the environmental impact of emissions when approving new oil extraction projects. This decision could significantly affect future Brent crude pricing and set a precedent for the oil industry's regulatory landscape.Â
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With oil prices edging closer to $90 per barrel, all eyes are on the market to see if this momentum will continue and establish a sustained rally. Investors and analysts are particularly interested in whether these conditions will support a longer-term rise in oil prices.Â
