By Adedapo Adesanya
Brent crude hit $104.09 per barrel on Monday after it surged by $2.98 or 3.1 per cent as supply took center stage on the market with the potential of new production cuts getting support and deadly clashes in Libya which renewed concerns about Libyan oil exports.
Also, the price of the United States West Texas Intermediate (WTI) crude gained $3.95 or 4.2 per cent to sell at $97.01 per barrel.
Last week, the Brent found its way back to the $100 mark and has traded above that threshold for most of the past five days after Saudi Arabia’s Energy Minister, Prince Abdulaziz bin Salman, said that the Organisation of the Petroleum Exporting Countries and allies (OPEC+) was ready to cut production at any time in any form if it believes it would bring stability to the “schizophrenic” oil market.
After the Saudi signal, OPEC’s rotating president for this year, Congo’s Hydrocarbons Minister Bruno Jean-Richard Itoua, also expressed support for potential cuts.
The United Arab Emirates (UAE) has similar views to Saudi Arabia on the crude oil markets, as speculation intensifies over whether the OPEC+ group would consider making new cuts to production again.
Some other OPEC+ producers, including Iraq, Venezuela, and Kazakhstan, have also signalled support for new production restrictions.
OPEC+ meets on September 5 at a regular meeting, but it’s not a given yet that it would discuss new production cuts.
Another supply concern came this weekend from Libya, the most volatile OPEC producer and one exempted from the OPEC+ cuts due to its dire security situation.
Clashes between rival factions in the capital Tripoli left at least 32 people dead and dozens more wounded this weekend, stoking renewed concern of a larger military conflict that could choke Libya’s oil exports, again.
Oil’s gain was limited by a strong US Dollar, which hit a 20-year high on Monday after the Federal Reserve chairman signalled that interest rates would be kept higher for longer to curb inflation.
While a strong greenback grips the market, the undersupply issue in the oil markets will probably continue to support the market with possibilities of the OPEC+ group’s next move and the volatile situation in Libya overshadowing concerns about the global economy on Monday.
Nations that are members of the International Energy Agency could release more oil from strategic petroleum reserves (SPR) if they find it necessary when the current scheme expires, the head of the agency, Mr Faith Birol said on Monday.
Dipo Olowookere