Oil Prices rise on Middle East supply fears
Oil prices saw an early surge on Thursday, extending the robust gains from the previous day. The uptick was fuelled by growing apprehensions about disruptions in Middle Eastern oil supply, particularly due to issues at a Libyan oilfield and increased tensions surrounding the Israel-Gaza conflict.
Brent crude gained 0.3% to hit $78.46 per barrel, while U.S. West Texas Intermediate crude futures increased by 0.43% to $73.01. Both benchmarks recorded a 3% uptick, settling higher on Wednesday for the first time in five days. WTI marked its most notable daily percentage gain since mid-November.
Protests in Libya prompted the shutdown of production at the Sharara oilfield, which has a daily capacity of 300,000 barrels. The Organization of the Petroleum Exporting Countries (OPEC) assured continuity in cooperation and dialogue within the broader OPEC+ alliance, comprising OPEC and partners like Russia. This commitment followed Angola’s announcement of its departure from the group last month. OPEC+ is set to convene on February 1 to assess the implementation of its recent oil output cut.
“While the geopolitical situation is a concern for the oil market, a fairly comfortable oil balance over the first half of 2024 does help to ease some of these worries,” noted Warren Patterson, Head of Commodities Strategy at ING.
“The group (OPEC+) will be keen to discuss the state of the oil market, particularly given the price action seen following the announcement of deeper cuts last month from a handful of members. However, given the scale of cuts we are already seeing, it will be increasingly difficult for the group to cut more if needed over the course of 2024.”
OPEC reiterated on Wednesday that cooperation and dialogue within the wider OPEC+ alliance would persist, despite Angola’s decision to exit the organization. The scheduled February 1 meeting will focus on reviewing the implementation of the latest oil output cut.