Geopolitical Conflicts, OPEC+ Efforts Lift Oil Prices
Crude oil prices rose earlier on Wednesday over rising tensions in the Middle East and efforts by the Organisation of Petroleum Exporting Countries (OPEC) and allies (OPEC+) to curb output level.
Brent rose 23 basis points to $82.53 per barrel after shedding one per cent yesterday, according to data from the International Commodities Exchange.
The American benchmark, West Texas Intermediate (WTI) rose by 21 basis points to $77.20 per barrel despite concerns over US economy. Crude oil prices retreated yesterday with both Brent and WTI falling over 1% at the close.
The ongoing concerns over a slowdown in global consumption (especially from China) are capping any major upside in oil prices, ING commodities strategists said in a midweek note.
ING analysts noted that increasing geopolitical conflicts and OPEC+’s continuous efforts to curb output levels have kept oil prices in a tight trading range for now.
Recent data from Russia’s Energy Ministry shows that the nation’s daily crude oil exports dropped by 42,000 tonnes or 307 million barrels per day in January compared to the May-June 2023 average, in line with its pledge to OPEC+ cuts.
As per the agreement, Russia pledged to reduce its daily oil exports by 500 million barrels, with 300 million barrels coming from crude shipments and remaining from other petroleum products.
On the production side, Russia’s Energy Ministry estimates crude oil output to drop by around 1.5% year-on-year to 523mt in 2024 compared to around 531mt in 2023, ING note stated.
Elsewhere, tension is escalating in the Red Sea due to Houthi attacks on commercial ships suspected of having links with Israel and British forces.
While the Houthis are threatening to retaliate against any attempt to send naval patrols to safeguard Israeli ships in the Red Sea, Western military forces are continuing attacks against Houthi targets within Yemen.
The Pentagon confirmed Tuesday that Houthi forces near Yemen downed a military MQ-9 Reaper drone on Monday.
‘We have been able to disrupt some delivery of capabilities to the Houthis. We’ve also continued to conduct coalition strikes and dynamic strikes in Houthi-controlled areas in Yemen,’ Sabrina Singh, the Pentagon’s deputy press secretary, told reporters.
Singh also said that as of Feb. 20, the US has taken 32 self-defence strikes against the Houthis, the most recent on Monday. Yemen’s Houthi group claimed Tuesday to have attacked an Israeli ship in the Gulf of Aden and ‘sensitive’ sites in southern Israel.
The minutes of the last meeting of the Fed’s Federal Open Market Committee (FOMC) will be published later on Wednesday. The minutes are expected to offer signals of the bank’s future steps for the coming period.
Analysts expect that the bank will start interest rate cuts in May or June.
Data revealing positive economic activity in Europe and Asia also aided in pushing oil prices higher. Analysts forecast that the European Central Bank and the Bank of England will start reducing interest rates in June.
The People’s Bank of China lowered its five-year loan prime interest rate, the benchmark rate for housing loans, above expectations in order to stimulate the real estate market. The move aims to revive the real estate sector while easing the burden on individuals and businesses.
According to the data announced early Wednesday in Japan, exports exceeded expectations with an annual increase of 11.9% in January. #Geopolitical Conflicts, OPEC+ Efforts Lift Oil Prices
