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Rising oil prices put pressure on the US economy

Le Tuyen (Resident of Vietnam Television Station in the US)Wednesday, May 18, 2022 14:35 GMT+7

Illustration – Photo: istock.

World crude oil in the night session of May 17 (Vietnam time) had a slight decrease in price but was still above the threshold of 110 USD/barrel. Oil prices at a high threshold creates pressure for gas price, thereby pushing up the prices of consumer goods. To moderate this phenomenon, the US seems to have to rely only on the interest rate tool.

Crude oil climbed to a seven-week high, then fell slightly on news of possible additional supply from Venezuela. However, prices above 110 USD/barrel are creating great pressure on the US economy.

Financial site CNN has an article, US crude oil is not cheap anymore. In the past, WTI used to trade a few dollars cheaper than North Sea Brent. However, the trading session on Tuesday, the futures contract of both oils sometimes rose to 115 USD/barrel. This is an indicator of how disturbed the market is by the pandemic and the conflict in Ukraine amid the fast approaching busy driving summer.

Oil prices cooled slightly when it was reported from Reuters that the Biden administration would allow oil company Chevron to negotiate with the government of Venezuelan President Maduro to temporarily lift the US export ban imposed on US oil. this country. However, experts said that despite re-importing oil from Venezuela, the US market still lacks a lot of oil.

Oil supplies from Venezuela can only supply 100,000 barrels per day. While the amount of US oil banned from importing from Russia is 700,000 barrels. Oil supply has not been fully compensated, while commodity prices continue to escalate.

Even the amount of oil in the US Strategic Petroleum Reserve “empty” 5 million barrels in the week ending May 13. This is the deepest decline since 1987. The reason is that the valve has to be opened too quickly.

In the past 6 months, the US has had to open its oil reserve valve 3 times with a total oil amount of up to 180 million barrels. This level is equivalent to the global consumption demand in 2 days.

The scarce supply caused the price of consumer gasoline to continue to rise to new highs. The average price, according to America Today, in all states is 4 USD / gallon (about 25,000 VND / liter) and will continue to increase.

Experts believe that gasoline prices in the US will remain high as oil prices remain in the triple digits and “fast or slow depending on the exploitation of oil and gas in other parts of the world. That is a process. long term”.

Rising oil and gasoline prices are continuing to put a heavy burden on commodity prices in the US. The chairman of the US Federal Reserve (FED) has also announced that the agency will continue to use the tool to raise interest rates if commodity prices continue to escalate. One of the agency’s most important meetings of the year will take place on June 14-15.

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