Oil prices rise on heightened supply concerns, brent crude at $86.48/bbl

Both Brent and WTI benchmarks have exhibited steady growth throughout the year, with Brent soaring nearly 11% and WTI around 12.5% by the close of trading on Friday. This upward trend is attributed to the prevailing sentiment that economies are resiliently staving off recessionary pressures, anticipated interest rate decreases in major economies by summer, and the extension of supply restrictions by the OPEC+ coalition of oil-producing nations into the second quarter.

Also read: Gold price jumps 6% this month. Should you buy as MCX gold rate dips ₹1000 from record high?

What’s weighing on oil prices?

• Hiroyuki Kikukawa, president of NS Trading, a unit of Nissan Securities, has highlighted escalating concerns about global oil supply. He points to heightened tensions stemming from attacks on Russian energy facilities, Ukrainian energy infrastructure, and the unresolved Israel-Hamas conflict. 
• According to sources cited by Reuters, a recent drone attack halved the capacity of yet another Russian oil refinery over the weekend. This incident adds to a series of assaults by Ukraine this month, which, according to Reuters calculations, have already taken out 7% of the total refining capacity. This disruption compounds the impact of unrelated maintenance activities. 
• In the Middle East, Israeli forces continued their offensive in Gaza on Sunday, despite unsuccessful attempts by Qatar and Egypt, backed by the U.S., to broker a ceasefire agreement between Israel and Hamas. Meanwhile, U.S. forces intercepted six Houthi unmanned aerial vehicles over the southern Red Sea after the group fired four missiles at a Chinese-owned oil tanker, as reported by U.S. Central Command on Saturday.
• Tamas Varga, from oil broker PVM, mentioned that while post-pandemic economic recovery is ongoing, leading to modest upgrades in oil demand forecasts for 2024 after an inflation-induced dip, OPEC has maintained its supply curbs. This decision has resulted in a substantial buffer, which could be utilized in the event of a genuine supply shortage. Varga emphasized that this buffer is crucial in countering a sustained Brent rally above $90 a barrel.

(With inputs from Reuters)

Milestone Alert!
Livemint tops charts as the fastest growing news website in the world 🌏 Click here to know more.

Unlock a world of Benefits! From insightful newsletters to real-time stock tracking, breaking news and a personalized newsfeed – it’s all here, just a click away! Login Now!

Published: 25 Mar 2024, 09:07 PM IST