By Adedapo Adesanya
Oil prices rose about 2 per cent on Monday, boosted by supply fears and a dip in the United States Dollar, with the Brent rising by $1.95 or 1.9 per barrel to $105.15 a barrel and the US West Texas Intermediate (WTI) leaping by $2 or 2.1 per cent to settle at $96.70 a barrel.
Oil futures have been volatile in recent weeks, pressured by worries that rising interest rates could limit economic activity and cut fuel demand growth but supported by tight supply, especially since Russia’s invasion of Ukraine and Western sanctions on Moscow.
A slightly weaker US Dollar also gave the commodity support as this makes it possible for holders of other currencies to buy more.
Support also came as China, the world’s largest oil exporter, and second-largest economy, missed a contraction in the second quarter of 2022, growing just 0.4 per cent year-on-year.
Prices drew support from expectations that Russian oil supply will edge lower in the months ahead as widely-expected plans for a price cap on Russian oil, a move that was met with restriction from the nation, saying that would not supply oil to countries that imposed a price cap on its oil.
The European Union (EU) said last week it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states last week aimed at limiting the risks to global energy security.
Traders are however throwing caution to the wind as the US and European economies are slowing with the US Federal Reserve set to raise interest rates again this week.
Officials of the US central bank have indicated the lender would likely raise rates by 75 basis points at its July meeting which starts on Tuesday.
On the supply front, Libya’s National Oil Corporation (NOC) said it aimed to bring back production to 1.2 million barrels per day in two weeks, from around 860,000 barrels per day.
However, analysts expect Libya’s output to remain volatile as tensions remained high after clashes between rival political factions over the weekend, continuing a trend that has led to the blockades of export terminals and oil fields, forcing the shutdown of a lot of production capacity.
