Global oil prices witnessed a noticeable rise in trading – today, Friday – with futures contracts for Brent crude for delivery next May rising by $2.24 per barrel, or 2.73%, to reach $84.15, while futures contracts for US West Texas Intermediate crude for delivery next April rose by 2.37. Dollars, or 3.03%, to $80.63 per barrel.
This increase has put both standards on track to achieve significant weekly gains, driven by a group of factors, including anticipation of OPEC+’s decision on production levels in the second quarter, geopolitical tensions due to the continued Israeli aggression on the Gaza Strip and the continuing crisis in the Red Sea, and anticipated economic data. From the United States, Europe and China.
OPEC Plus decisions
It is estimated that the main driver of the increase in crude prices is the expected decision from OPEC Plus to extend voluntary production cuts to the second quarter of 2024.
“Expectations that OPEC+ will continue with voluntary production cuts, and these cuts in the second quarter of 2024 are the main focus of the market,” Andrew Lipow, President of Lipow Oil Associates, emphasized.
Analyst Carsten Fritsch from Commerzbank supported this view, noting that committing to cuts until the end of the year would send a strong and positive signal to the price.
A survey conducted by Reuters revealed that OPEC produced 26.42 million barrels per day last February, a modest increase from January. Strong expectations that Saudi Arabia will maintain prices for crude oil sold to Asian customers in April, coupled with geopolitical tensions in the Red Sea, have led to an increase in prices.
Tim Snyder, an economist at Matador Economics, noted in an interview with Reuters that “geopolitical tension in the Red Sea also led to a rise in prices on Friday.” This tension intensified with the leader of the Houthi group in Yemen announcing military “surprises” in the region, which added an additional layer of uncertainty to the market.
Expectations that Saudi Arabia will announce slight changes in the price of its crude heading to Asia (Reuters)
Saudi Arabia may change prices
The Oil Price platform quoted a Reuters survey as expecting that Saudi Arabia, as the world’s largest exporter of crude oil, will announce slight changes in the price of its crude heading to Asia next April.
The survey of refineries conducted by Reuters indicated that Saudi Aramco may keep the price of its main Arab light crude oil for Asia unchanged or raise it slightly by up to $0.20 per barrel.
This decision is in line with strengthening the structure of the Dubai market, and aims to address disruptions in oil shipping in the Red Sea.
China’s influence on oil demand
Meanwhile, forecasts from the research unit of the China National Petroleum Corporation add an interesting dimension to the oil market. It is expected that the demand for petroleum products in this country may reach its peak before next year.
The head of the oil market research department at the Economics and Technology Research Institute of the China National Petroleum Corporation explained that “the overall demand for oil is on an upward path this year.”
2024-03-01 19:35:28
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