Oil prices hit 10-month high

U.S. oil prices reached $90 a barrel Thursday for the first time in nearly a year, with the spike coming shortly after Saudi Arabia announced extended production cuts.

West Texas Intermediate crude prices hit $90.25 Thursday, surpassing $90 for the first time since last November. 

The report comes just more than a week after Saudi Arabia announced that the supply cuts of 1 million barrels will be extended through the remainder of 2023, with the state-run Saudi Press Agency saying the cuts would be reviewed monthly with the possibility of increases or decreases. Another oil price measure, international benchmark Brent crude, closed at $90 a barrel for the first time this year following the announcement. Brent crude hit $93 a barrel Thursday afternoon, the highest price in 10 months.

In its September report on the oil market, the International Energy Agency (IEA) projected that the Saudi cuts, as well as Russian oil cuts also subject to extension, will ensure a “substantial” market deficit through the year’s fourth fiscal quarter. 

“Unwinding cuts at the start of 2024 would shift the balance to a surplus,” according to the IEA report. “However, oil stocks will be at uncomfortably low levels, increasing the risk of another surge in volatility that would be in the interest of neither producers nor consumers, given the fragile economic environment.”

It’s not yet clear what impact the increase will have on gas prices, but it comes after the consumer price index posted an inflation rate of 0.6 percent in August, up from 0.2 percent the previous month, with gas prices accounting for the majority of the jump. The energy index overall increased 5.6 percent over August.

Although gas prices are not set by the federal government, increases have dogged the Biden administration, especially since the February 2022 invasion of Ukraine by Russia.