Oil prices rose more than a dollar per barrel on Friday, buoyed by growing evidence of supply shortages in the coming months and rising tensions between Russia and Ukraine that could further hit supplies.
Brent crude futures rose $1.24, or 1.6%, to $80.88 a barrel by 1:08 p.m. EDT (1708 GMT). U.S. West Texas Intermediate crude futures rose $1.28, or 1.7%, to $76.93 a barrel.
“The oil market is starting to slowly price in a looming supply crunch as it is on track for its fourth week of price gains,” said Price Futures Group analyst Phil Flynn.
“Global supplies are starting to tighten and that could accelerate dramatically in the coming weeks. Increased war risk could also impact prices,” Flynn said.
Russia hit Ukrainian food export facilities for a fourth day in a row on Friday and practised seizing ships in the Black Sea, in an escalation of tensions in the region since Moscow’s withdrawal this week from a UN-brokered safe sea corridor agreement.
In the U.S., crude inventories (USOILC=ECI) have fallen, amid a jump in crude exports and higher refinery utilisation, the Energy Information Administration (EIA) said on Wednesday.
Separately on Friday, UAE Energy Minister Suhail al-Mazrouei told Reuters that current actions by OPEC+ to support the oil market were sufficient for now and the group is “only a phone call away” if any further steps are needed.
Meanwhile, investors welcomed stimulus measures designed to reinvigorate China’s sluggish economy. Data from the world’s second-biggest oil consumer suggests the government’s 5% annual growth target will be missed.
On Friday, Chinese authorities unveiled plans to help boost sales of automobiles and electronics.
“We estimate the supply and demand balance for oil in the $75-95 range for 2024, as limited OPEC+ supply and good demand in the U.S. is offset somewhat by weaker-than-expected demand in China as its economic recovery continues to lag,” said Jay Hatfield, CEO at Infrastructure Capital Management.
Source: Reuters (Reporting by Shariq Khan in Bengaluru; Additional reporting by Natalie Grover in London, Arathy Somasekhar in Houston and Andrew Hayley in Beijing; Editing by Marguerita Choy and David Holmes)