The reduction in oil production, high logistics cost for Russian oil, expected higher demand, and other factors are expected to push up the crude oil prices, said Emkay Wealth Management.

According to the company, the crude oil prices have been trading in the range of $65-120/bbl in the past 1 year, and are way off the high levels witnessed in the month of June 2022.

Brent crude is currently at around $92 per barrel at a critical level owing to the onset of winter resulting in higher demand for oil in Europe, people moving out on their vehicle during the holiday season, and supplies from Russia to be curtailed by almost 50 per cent by December of this year.

This is because of the disagreement on European countries' proposed capping of the price of Russian oil, said Emkay Wealth.

Further the purchase of oil by some countries from Russia, including India, is likely to be stopped due to the high freight which borders on almost an additional $7-8 per barrel which makes it more expensive compared to the supplies from the Middle East or Africa.

"Therefore, it is highly likely that the supply from Russia may be around 2.50 million barrels per day," Emkay Wealth said.

These aside, the Organisation of the Petroleum Exporting Countries (OPEC) has reduced production and supplies are about three million barrels per day short compared to the target.

"This shortfall has been met with the supply from the Strategic Petroleum Reserve (SPR) of the US on a weekly basis. In the last couple of weeks, the release from the SPR has been to the tune of 7 million barrels for commercial use," Emkay Wealth said.

The SPR level is at its lowest level in recent history. According to some reports, the US would replenish the stock that has been released in any case at some point in time.

It will have to move into replenishing the stock once the oil price touches lower levels.

Despite the strength of the US dollar as indicated by the Dollar Index, oil prices are expected to stay northbound mainly on the account of supply-restricting factors, and therefore, we could see a retest of higher levels in the coming weeks, Emkay Wealth added.