By Adedapo Adesanya
The price of Brent and West Texas Intermediate Crude futures rose slightly on Friday by 12 cents and 16 cents apiece to close at $77.27 per barrel and $71.93 per barrel.
Both crude benchmarks ended 2023 about 10 per cent lower each after two years of gains as geopolitical concerns and oil production cuts drove wild fluctuations in prices.
Prices fell sharply on Thursday as some shipping companies said they would resume movements through the Red Sea, easing supply concerns.
Major firms had stopped using Red Sea routes after Yemen’s Houthi militant group began targeting vessels in retaliation to Israel’s attacks in Gaza.
However, some crude oil and refined product tankers are still opting for the longer route around Africa to avoid potential conflicts in the region.
Geopolitical tensions in the Middle East continued to support prices as Israel intensified its attacks in southern Gaza.
Data released on Friday by the US Energy Information Administration (EIA) showed that strong oil demand in October also offered some support to prices.
This year, oil saw heightened volatility this year again, as concerns about demand pulled prices lower while the cuts by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+, and extra cuts by Saudi Arabia only offset to an extent the drop in prices.
OPEC is facing weakening demand for its crude in the first half of 2024 just as its global market share declines to the lowest level since the pandemic on output cuts and Angola’s exit from the group.
Overall, the OPEC+ group’s efforts to prop up prices have failed this year, as non-OPEC oil supply – led by the United States – grew faster than previously expected.
The higher non-OPEC+ production, courtesy also of Brazil, Canada, and Norway, among others, prompted analysts to revise downward their expectations of a market deficit at the end of this year and early next year.
China’s economy was also a major concern for oil market participants, with a mixed bag of monthly reports about manufacturing activity and crude oil imports.
The rising interest rates in the United States also weighed on the market, which feared a recession would follow the rate hikes and depress oil demand.
The Hamas-Israel conflict, which added to the Russian war in Ukraine to increase geopolitical risks, hasn’t pushed up oil prices this year, either. This was because major oil players didn’t actively play as they did in 1973.
