2/13/2024

Oil rises due to Middle East risks

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ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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Key points:

  • Oil is rising again due to risks in the Red Sea.
  • Uncertainty about a potential cut in US interest rates is holding back oil price gains.
  • OPEC+ will decide in March to extend the cuts into the first quarter.

On Tuesday, concerns about potential disruptions in Middle East supplies contributed to an increase in oil prices. However, the growth was constrained by uncertainties surrounding a potential reduction in U.S. interest rates and its subsequent influence on fuel demand.

Brent crude futures experienced a rise of 31 cents, equivalent to 0.4%, reaching $82.31 per barrel. Simultaneously, West Texas Intermediate (WTI) crude saw an increase of 36 cents, representing a 0.5% growth, bringing it to $77.28 per barrel.

Conflict in the Middle East drives prices higher

On Monday, Yemen’s Houthis, aligned with Iran, launched two missiles at an Iranian cargo ship in the Red Sea. These attacks have been ongoing since mid-November, targeting international vessels with commercial ties to the US, UK, and Israel. The group expresses solidarity with the Palestinians amid the Israel-Hamas conflict. The recent tightening of US sanctions against Iran may potentially impact oil supplies to the market.

However, concerns about interest rates have constrained price gains. The Federal Reserve’s January survey of consumer expectations indicated an unchanged inflation forecast for the year. If worries about inflation delay the Fed’s interest rate cuts, it could result in decreased oil demand as economic growth slows. The market awaits US inflation data on Tuesday, while UK inflation and Eurozone gross domestic product data are expected on Wednesday.

OPEC+ plans to cut production

Market participants are eagerly anticipating the release of US oil inventory data later on Tuesday. Analysts project an increase of approximately 2.6 million barrels in crude oil inventories for the week ending February 9.

Additionally, the Organization of the Petroleum Exporting Countries (OPEC) is scheduled to publish its monthly oil market report on the same day. Iraq, an OPEC member, affirmed on Monday its commitment to adhere to the organization’s decisions, limiting production to no more than 4 million barrels per day.

Looking ahead, OPEC and its allies, collectively known as OPEC+, will make a decision in March on whether to extend voluntary oil production cuts into the first quarter. In November, OPEC+ reached an agreement on voluntary production cuts totaling around 2.2 million barrels per day for the first quarter of this year. This initiative, spearheaded by Saudi Arabia, involved extending its voluntary cut by 1 million barrels per day.

ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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