Oil Rallies Amidst Geopolitical Tensions, Strong US Dollar
Oil prices saw marginal rises as geopolitical tensions in the Middle East and Ukraine triggered supply fears, although the rising value of the US dollar following the US Federal Reserve’s decision to keep interest rates unchanged blunted further gains.
International benchmark Brent crude traded at $85.91 per barrel on Friday, increasing by around 1.86% relative to the closing price of $84.34 a barrel on Friday last week. West Texas Intermediate (WTI), the American benchmark, traded at $80.81 a barrel at the same time on Friday, for a rise of about 0.51% from last Friday’s session that closed at $80.58 per barrel.
Both benchmarks started the week on an upward trajectory over rising supply fears as Israeli Prime Minister Benjamin Netanyahu said he would not bow to international pressure to halt the war on the Gaza Strip.
Brent reached the highest level since November 2023, hitting $87.70 a barrel on March 19. Yemen’s Houthi group, meanwhile, vowed late Thursday to carry out more effective strikes on ships linked to the US, UK and Israel.
‘We have significant plans for the future to carry out strikes that will have a greater impact on the enemy’s ships,” the group’s leader, Abdul-Malik al-Houthi, said in a recorded speech. Disclosing no specifics of the plans, he added that ”we continue to expand military operations more and more, with many options available to us without hesitation or concern for the threats of the enemies.”
He commended the group’s ability to ‘overcome US and Israeli technologies in surveillance, jamming and interception as a significant victory and development for our military forces.’ China’s better-than-expected economic data also instilled hopes of a demand rebound in the world’s largest oil-importing country.
Industrial output rose at a much faster pace than market estimates, rising 7% in the January–February period compared to the same period a year earlier, the National Bureau of Statistics said Monday. Uncertainty over the US Federal Reserve’s (Fed) monetary decision caused many price fluctuations during the week.
During the Fed’s meeting on Wednesday, participants agreed to keep interest rates steady, leaving the federal funds rate unchanged between the 5.25% and 5.5% target range, the highest in 23 years.
Despite the unchanged rates, the Central Bank expects at least three interest rate cuts in 2024, according to its latest projections. Following the Fed’s decision, the US dollar strengthened against other currencies, putting downward pressure on oil prices.
The US dollar index, which measures the US dollar’s value against other currencies, rose 0.40% to 104.08 on Friday. Signs of rising demand in the US, the world’s biggest oil consumer, contributed to the price uptrend on Thursday.
Energy Information Administration (EIA) data on Wednesday showed a 2 million-barrel decline in US commercial crude oil inventories last week, against the market expectation of a decrease of around 900,000 barrels. Gasoline inventories decreased by 3.3 million barrels over the same period. Investors Lose N248bn as Bears ‘Raid’ Nigerian Bourse
