Oil Prices Climb 5.7%, Tensions Stir Market Waves
- Brent futures rose slightly to $81.71 a barrel, while U.S. WTI crude increased to $76.39 a barrel.
- Oil prices are set for a 5.7% weekly gain amidst ongoing Middle East tensions.
- Impact of OPEC+ Deal: 340,000 bpd Reduction
Brent futures experienced a modest increase of 8 cents, reaching $81.71 a barrel, while U.S. West Texas Intermediate (WTI) crude futures saw a slight uptick of 17 cents to $76.39 a barrel.
In the previous trading session, oil prices surged by approximately 3% following an escalation in the Middle East. This increase occurred after Israeli military actions targeted Rafah, a city on the southern border, following Prime Minister Benjamin Netanyahu’s refusal of a ceasefire offer to end hostilities in the Palestinian region. The conflict, particularly highlighted by Israeli military operations in Gaza and Rafah, has not only intensified regional instability but also cast a shadow of uncertainty over the global oil market.
Weekly Oil Surge: 5.7% Gain Despite Production Stability
Despite the geopolitical turmoil, the direct impact on oil production has been minimal. However, the market has remained sensitive to any potential threats to supply chains. The ongoing conflict in Ukraine adds another layer of complexity, with Russia’s drone attacks on refineries and technical outages leading to an unplanned increase in crude exports. This situation challenges Russia’s commitment under the OPEC+ pact to curb oil sales, further complicating global oil supply dynamics. The collective effect of these conflicts has driven a significant 5.7% price gain for both Brent and WTI futures over the week.
OPEC+ Pact: Russia Cuts Oil Production by 9.5M bpd
As part of the agreement with the Organization of the Petroleum Exporting Countries and its partners, collectively known as OPEC+, Russia has committed to limiting its crude oil production to 9.5 million barrels per day (bpd). Additionally, Russia has decided to reduce its crude oil exports by 300,000 bpd and its fuel exports by 200,000 bpd below the levels recorded in May and June. The agreement, coupled with operational disruptions in Libya, led to a total reduction in OPEC+ oil production by 340,000 bpd for the month.
