Oil Mixed on Suspension of Iraq Exports, Global Uncertainties
Oil prices were mixed on Tuesday over the world bank group’s negative global economic growth forecasts that raised demand concerns, at the same time that the supply glut eased following the suspension of Iraq exports.
International benchmark Brent crude traded at $77.65 per barrel, translating to a 0.14% decrease from the closing price of $77.76 a barrel in the previous trading session.
West Texas Intermediate (WTI) crude oil closed at a two-week high, rising for a second session as investors return to risk assets as fears for the health of the banking sector fade, while supplies remain constrained on the suspension of shipments from Iraq’s Kurdistan region.
WTI crude for May delivery closed up US$0.39 settling at US$73.20 per barrel. May Brent crude, the global benchmark, was last seen when it jumped up by US$0.53 to US$78.65 per barrel.
The rise follows a gain of more than 5% on Monday, as worries over the health of banks amid rising interest rates faded as the failed Silicon Valley Bank found a buyer and after last week’s emergency rescue of Credit Suisse eased fears.
The suspension of 400,000 barrels per day or more of production from Iraq’s Kurdistan region is also supporting prices, after an arbitration panel found Turkey was allowing the shipment of oil from the region by pipeline without Iraq’s permission, violating a treaty between the two countries.
Rising price are “supported by optimism that the recent banking crisis is fading together with a legal dispute between Iraq, its semi-autonomous region of Kurdistan and Turkey halting around 400,000 barrels a day of seaborne exports from the Turkish port of Ceyhan,” Saxo Bank noted.
Investors are still focused on the ongoing financial crisis in the US and the trajectory of the Chinese economy and oil demand outlook.
The World Bank said Monday that it expects global economic growth to fall to its lowest level in three decades by the end of 2030, referring to the period from now until then as the ‘lost decade.’
‘The global economy’s ‘speed limit’—the maximum long-term rate at which it can grow without sparking inflation—is set to slump to a three-decade low by 2030,’ it said in a report, Falling Long-Term Growth Prospects: Trends, Expectations, and Policies.
The bank said nearly all the economic forces that powered progress and prosperity over the last three decades were fading, forcing a decline in global potential GDP growth between 2022 and 2030.
‘These declines would be much steeper in the event of a global financial crisis or a recession,’ the World Bank warned.
Meanwhile, the International Monetary Fund’s (IMF) Managing Director Kristalina Georgieva echoed similar fears, pointing to increasing financial stability risks while market uncertainties remain high. #Oil Mixed on Suspension of Iraq Exports, Global Uncertainties
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