On Thursday Brent crude oil surpassed $97 per barrel which is the highest in almost a year which has been edging closer towards $100 per barrel.
Earlier this year the worlds largest producers, Suadi Arabia and Russia announced production cuts which has caused the price hike in oil.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said, “Concerns about tight supplies are fuelling the rise in oil prices, reigniting worries about inflation and the need for interest rates to stay higher for longer.
“Brent crude has swept past 97 US dollars a barrel as the effect of Saudi Arabia and Russia’s extended production cuts takes hold and data shows a faster than expected drawdown of crude stocks in the US.
“Despite slowing economies in Europe and fragility in China, global demand for oil for now continues to ramp up, to meet the seemingly insatiable needs for transportation, power generation and other petrochemical activities.
“The psychologically important milestone of 100 US dollars a barrel is in sight, which is prompting concerns about higher energy costs being passed on by companies in the form of higher prices.”
“Another leg up in oil prices has added to the market worries about sticky inflation, thereby stoking fears that interest rates will stay higher for longer,” said Russ Mould, investment director at AJ Bell.
“The market is worried that supplies of oil are going to be tight and if prices keep going, it is going to cause a real headache for businesses and consumers.”