Oil prices rose on Thursday amid geopolitical tensions and concerns over potential disruptions to global supply chains. Brent crude futures for January rose 28 cents, or 0.4 percent, to settle at $73.09 per barrel, while U.S. West Texas Intermediate crude for January increased by 28 cents, or 0.4 percent, to $69.03 per barrel.
The ongoing conflict between Russia and Ukraine remains a determinant in oil markets. This is because this war saw Ukraine utilize advanced Western weapons, including British Storm Shadow cruise missiles and U.S. ATACMS missiles, to bomb Russian territory, raising the stakes for further escalations. Attacks on Russian bases, Moscow has warned, could have severe consequences. This week is significant because it marks the 1,000th day of the conflict, underscoring its protracted effect on global geopolitical stability.
U.S. crude inventories gained a modest 545,000 barrels last week and reached 430.3 million barrels, according to the EIA. That was more than analysts had forecasted to increase by 138,000 barrels. Gasoline stocks advanced more than anticipated, and distillate inventories shrank more sharply than forecast.
Meanwhile, Norway’s Equinor said that it has restored full production capacity at its North Sea oilfield, Johan Sverdrup, after a temporary power outage. Even so, market participants are still wary of disruptions as global oil demand appears to be weakening.
The Organization of the Petroleum Exporting Countries and its allies (OPEC+), which controls nearly half of the world’s oil production, are reportedly contemplating the delay of planned output increases. Initially, OPEC+ had planned to gradually reverse cuts in their production through 2024 and 2025. However, slowing demand in China as well as globally, combined with the perception that non-OPEC+ nations are picking up the slack in production, has thrown these plans off kilter. The group’s next meeting on December 1 may usher in additional adjustments to the strategy.
These developments highlight the interplay between geopolitical tensions, inventory shifts, and global demand dynamics in shaping the oil market’s trajectory. As the conflict between Russia and Ukraine intensifies and economic headwinds persist, market volatility is likely to remain elevated.
Source: Reuters