Brent Rises to $86 amidst Supply Uncertainties
Oil prices rose on Tuesday over investors’ supply jitters as the oil markets are awaiting the next round of sanctions on Russian oil products slated for Februray 5, 2023 amid fears of global recession.
International benchmark Brent crude traded at $86.17 per barrel time, up 0.30% from the closing price of $85.91 a barrel in the previous trading session.
American benchmark West Texas Intermediate (WTI) traded at $80.57 per barrel at the same time, a 0.38% gain after the previous session closed at $80.26 a barrel.
Tight supply projections were the main driver of the price upticks as on Feb. 5, when the next set of EU sanctions against Russian oil products is scheduled to go into force.
It will impact refined petroleum products like diesel. It comes two months after the G7 decision to cap the price of Russian oil at $60 per barrel and the EU ban on Russian seaborne crude exports on Dec. 5.
However, lingering fears of global economic recession continue, especially amid unfolding travel restrictions on Chinese people after the country eased its 2-year-long strict pandemic measures.
The decision of the world’s largest oil importer and the second largest oil consumer country raised concerns for a new wave of infections because the number of cases have been on the rise.
Meanwhile, IMF head Kristalina Georgiva warned that 2023 is going to be a tough year as the main engines of growth, namely the US, Europe and China, are all experiencing weakening activity.
Fresh PMI data for China showed the manufacturing sector continued to contract in December although the country already started to reopen and some measures of mobility in key urban areas have picked up.
On the supply side, investors are watching for further actions from Russia after it banned oil exports to foreign buyers that adopt the G7 price cap, as well as the prospect of further production cuts from OPEC+.
The US oil benchmark gained about 7% in 2022, a year marked by extreme volatility due mainly to the Ukraine invasion, China’s Covid woes and aggressive rate hikes. # Brent Rises to $86 amidst Supply Uncertainties