Oil Rises, Gas at 2-Year High as Supply Risks Heighten
Oil prices rose as Russia’s production underperformed the Organisation of Petroleum Exporting Countries and allies (OPEC+) quotas, while sanctions and export bans further tightened global supply.
Energy sector in Ukraine and Russia continue to face drone assaults, while signs of tighter supplies in Russia and rising geopolitical tensions further pushed the energy complex higher. According to media reports, drones attacked a Russian oil refinery plant in the Saratov region. The affected plant is part of the Rosneft oil company known as Kreking, one of the oldest Russian oil refineries.
Meanwhile, Russia also targeted Ukraine’s gas and power facilities in an overnight attack. The international benchmark Brent crude rose by 0.5%, trading at $76.21 per barrel while the US benchmark West Texas Intermediate (WTI) increased by 0.5%, reaching $72.55 per barrel, compared to its prior session close of $72.19.
Oil prices gained about 2% in the previous session, driven by signs of tightening supply, rebounding after three consecutive weeks of losses.
Both benchmarks continued to climb on rising supply concerns as Russia’s oil production remained below the quota of OPEC+, which consists of the Organization of the Petroleum Exporting Countries (OPEC) and some oil producers including Russia. Meanwhile, concerns that global trade tensions could negatively affect economic growth and the US Federal Reserve’s high interest rates are keeping price increases in check.
Additionally, news that European countries are planning to seize Russia’s ‘shadow fleet’ increased concerns in the markets. US sanctions targeting Russian oil tankers, producers and, insurers last month significantly disrupted Russian oil shipments to China and India.
Disruptions in Russia’s fuel exports are driving up cash oil prices, especially in the Middle East region. Russia’s Federal Monopoly Service imposed a one-month export ban on major producers to stabilize gasoline prices.
In addition, the US administration announced new sanctions on networks transporting Iranian oil to China. US President Donald Trump has reinstated the ‘maximum pressure’ policy on Iranian oil exports. The US Federal Reserve’s (Fed) announcement that it will not cut interest rates until the next quarter limited the upward price movement.
Experts note that money market pricing indicates that the Fed will cut interest rates for the first time in June. However, they warn that the Fed’s continued high interest rates may limit economic growth leading to a decline in oil demand.
Analysts will closely follow US Federal Reserve Chairman Jerome Powell’s statements today on the course of the US economy and the possible effects of tariffs. Gas prices in Europe are trading at their highest level in two years with the most active TTF futures moving above €58.5/MWh yesterday.
The upward rally was driven by rising demand following cooler weather conditions, ongoing supply disruptions, weaker power generation from renewables and low levels of inventory at 48.5% currently. Prolonged colder temperatures across Europe have intensified the need for heating eventually resulting in a faster depletion of inventories.
Similarly, US natural gas prices edged higher in the week following the forecasts of cooler temperatures over much of the US. #Oil Rises, Gas at 2-Year High as Supply Risks Heighten Access, Transcorp, Oando Drive Intraday Gain in Equities Market
