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(Kitco News) - The spike in oil prices does not bode well for gold miners, according to Exploration Insights’ Joe Mazumdar.

Mazumdar spoke to Kitco in mid-September at the Precious Metals Summit 2023 in Beaver Creek, Colorado. Mazumdar is editor and analyst of Exploration Insights. Brent Cook, who is founder of Exploration Insights, also joined the interview.

Mazumdar noted that oil prices are up due to policy actions by Russia and China. Production cuts by OPEC+ through year-end pushed oil higher. On Tuesday, West Texas Intermediate (WTI) crude oil prices pushed to a nearly one-year high, testing resistance above $93.50 per barrel. Oil prices have rallied more than 37% from their mid-July lows.

Due to the high energy prices, gold miners’ margins are going to be squeezed.

"[It's] making it harder for them to show decent cash flow for probably the second half of this year," said Mazumdar. "Oil is a big part of any mining venture."

The junior gold miners have generally fallen out of favor, noted Cook. Even good news can turn into bad news for a junior miner.

"News releases are having minimal positive effects, if at all," said Cook. "It's negative more often than not because people in the sector...they're just looking for an out. It's such an illiquid market right now," said Cook, noting that investors can sell against the good news to exit their position.

Kitco Mining’s coverage of the Precious Metals Summit 2023 was sponsored by Newcore Gold.

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.