Brent crude rose above $90 a barrel for the first time since last October, as geopolitical tensions and production cuts outweighed caution over interest rate cuts by the US Federal Reserve.
Brent crude futures for June rose $1.30, or 1.5 percent, to $90.65 per barrel, while US West Texas Intermediate futures for May rose $1.16, or 1.4 percent, to $86.59 per barrel.
Both contracts closed on Thursday at their highest levels since October, after receiving support in recent days from escalating geopolitical tensions and potential supply risks.
Reasons for the rise in global oil prices
Oil’s rise on Thursday comes after news reports of Israeli embassies across the United States being placed on high alert due to growing threats of an Iranian attack on Israeli diplomats, as Iran vowed to retaliate against Israel for its attack on Monday that killed high-ranking Iranian military personnel. Iran is the third largest producer in the Organization of the Petroleum Exporting Countries (OPEC).
In a sharp shift in tone, Washington issued its strongest public rebuke to Israel on Thursday since the start of its war with Hamas, warning that US policy on Gaza will be determined by whether Israel takes steps to address the safety of Palestinian civilians and aid workers.
Iran sanctions
On the other hand, the United States on Thursday imposed new anti-terrorism sanctions linked to Iran on Oceanlink Maritime DMCC and its ships, citing its role in shipping goods on behalf of the Iranian military. The US Treasury Department said that the United States is using financial sanctions to isolate Iran and disrupt its ability to Funding proxy groups and obstructing the country’s support for Russia’s war in Ukraine.
Prices were also supported after US Secretary of State Antony Blinken said Ukraine would eventually join NATO, as support for the country remains “strong” among member states.
Oil’s recent gains also follow Ukrainian attacks on Russian refineries that reduced fuel supplies, and news that Mexican state energy company Pemex has asked its trading unit to cancel up to 436,000 barrels per day of crude oil exports this month as it prepares to process domestic oil. At the new Dos Bocas refinery.
“All of these geopolitical factors happened simultaneously, driving uptrends and ultimately profit-taking,” according to Frank Monkham, senior portfolio manager at Ultimo LLC.
A meeting of senior ministers from the Organization of the Petroleum Exporting Countries and its allies (OPEC Plus), including Russia, kept oil supply policy unchanged on Wednesday and put pressure on some countries to step up compliance with production cuts.
The alliance said some members would offset oversupply in the first quarter, and also said Russia would shift to production rather than export restrictions.
Demand for oil
This comes as investors look to economic data and monetary policy for potential clues to the outlook for oil demand.
US unemployment claims increased more than expected last week, according to Labor Department statistics, with labor market conditions gradually deteriorating.
This came after Federal Reserve Chairman Jerome Powell expressed caution on Wednesday about the timing of future interest rate cuts, after recent data showed higher-than-expected job growth and inflation.
Friday’s March employment report is likely to show nonfarm payrolls increased by 200,000 jobs in March after rising by 275,000 jobs in February, according to a Reuters survey.
(Reuters)
2024-04-04 19:48:07
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