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Costlier petrol is a permanent reality, even without conflict in the Gulf.

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Iran launched missiles towards Israel on April 14th, causing oil markets to close. When they reopened, Brent crude, the global benchmark, dipped below $90 a barrel. Traders anticipated the attack but are now betting that Israel will respond cautiously. Despite geopolitical tensions, oil prices have risen a quarter since December, with multiple factors contributing to the increase.

Supply disruptions from Mexico, Libya, and Scotland, along with tougher sanctions on Russia and Venezuela, have impacted global oil output. OPEC+ deliberately reduced production by 2.2 million barrels a day, contributing to the rise in prices. Non-OPEC output is expected to increase, but at a slower rate than demand, leading to shrinking global oil stocks.

With strong global demand, the International Energy Agency predicts a rise in crude demand this year. Analysts speculate that if OPEC+ continues production cuts, oil prices could reach $100 a barrel. However, concerns about destroying demand may prompt the cartel to signal an increase in production.

While tensions between Iran and Israel may escalate, causing potential disruptions in oil exports, the most likely scenario is for oil prices to remain around $85-90 a barrel. Whether these prices are sustainable for the world economy and American voters, who are sensitive to fluctuations in gasoline prices, remains to be seen.

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