Oil prices rose early Wednesday morning as markets anticipate a tightening of the oil market later this year. The price increase is due to expectations that demand will outpace supply, resulting in higher costs for consumers and businesses alike.
Analysts have predicted that the Organization of Petroleum Exporting Countries (OPEC) and its allies could agree to extend production cuts beyond June when they meet next month. This would reduce global supplies further, leading to an even tighter market and potentially higher prices down the line.
The rise in oil prices also reflects increasing optimism about economic recovery from COVID-19 lockdowns around the world as more countries begin vaccinating their populations against the virus. Demand for fuel has already increased significantly over recent weeks with many people returning to work or taking vacations after months at home during lockdown restrictions last year.
This trend is likely to continue throughout 2021, driving up demand for crude oil which could result in further increases in global markets if OPEC does not adjust its production levels accordingly by reducing output further or increasing it slightly depending on how much additional supply is needed globally over coming months.