Brent crude oil reached $120 per barrel on Memorial Day—the official kickoff of the summer driving season in the United States.
The International benchmark reached a two-month high as the prices for fuels like gas and diesel continued to rise. US benchmark West Texas Intermediate rose by a similar amount to more than $116 a barrel.
According to The Hill, the price spike comes as demand in the United States is expected to rise with the start of the summer driving season, and despite the EU’s failure to reach any agreement among its members on a Russian crude oil ban, with Hungary still holding out for better terms.
Monday kicked off the official start of summer vacation time in the United States. The average national gasoline price reached $4.619 per gallon on May 30—the highest level ever recorded, The average gas price was $3.00 a gallon a year ago.
The price rally for crude comes at a time when refined products are still tight at major delivery hubs. The last time crude reached $120 a barrel was in late March, shortly before President Joe Biden authorized the release of 1 million barrels a day for a period of six months from the Strategic Petroleum Reserve.
That move sent the price of Brent to as low as $98 a barrel in early April, but it has since climbed back to well over $100 a barrel.
Lower exports of diesel from Russia – which many countries are shunning or cutting back on – have tightened the market even more than oil, reports the Financial Times. This puts the gas oil contract in Europe, a proxy for diesel and other distillates, trading close to record levels near $1,200 a ton.
Keshav Lohiya at consultancy Oilytics says, “Despite record high prices in local currencies, political decisions like subsidies continue to distort the market. In addition, post-Covid demand continues to keep mobility very high in Europe, especially with the run-up to summer.”