By Adedapo Adesanya
The price of the international crude benchmark, Brent Crude, rose by 88 cents or 1.0 per cent to $86.22 per barrel on Monday, triggered by lower crude exports from Iraq and Saudi Arabia and signs of stronger demand and economic growth in China and the US.
Also, the US West Texas Intermediate (WTI) crude appreciated by $1.01 or 1.3 per cent to $82.05 per barrel, as Iraq, the second-largest producer in the Organisation of the Petroleum Exporting Countries (OPEC), said it would reduce crude exports to 3.3 million barrels a day in the coming months to compensate for exceeding its quota since January, a pledge that would cut shipments by 130,000 barrels per day from February.
Saudi Arabia, the de facto leader of OPEC, has highlighted the importance of compliance with the pledged cuts even as oil prices have rallied this year.
Iraq’s oil ministry said in a statement on Monday that it was committed to voluntary cuts agreed with OPEC+, which limit it to producing 4 million barrels per day. Initially in place for the first quarter, the voluntary cuts have since been extended to the end of June.
The OPEC+ voluntary cuts in place until June are the latest in a series of curbs by the group since late 2022 to support the market in the face of expectations that weak economic growth will limit oil demand when supply is rising from other producers like the US, Brazil, and others.
The IEA revised its oil demand forecast higher, meanwhile, expecting growth to come in at over 1.3 million barrels per day this year, up from 1.2 million barrels per day in last month’s report.
Another cause for supply concern was the string of Ukrainian drone attacks on Russian refineries, which are affecting fuel output in the world’s largest exporter.
Market analysts say the strikes on Russian refineries added $2–$3 per barrel of risk premium to crude last week, which remains in place as we start this week with more attacks over the weekend.
Support also came as prices of petrol (called gasoline) increased last week for the third week in a row.
In China, the world’s biggest oil importer, factory output and retail sales beat expectations in the January-February period, marking a solid start for 2024 and offering some relief as it has performed below expectations so far.
