Oil rises as US sanctions, stockpile forecasts raise supply worries
Oil prices rose on Friday after the U.S. tightened its sanctions programme against Russian crude exports, raising supply concerns in an already tight market, and global inventories are forecast to decline through the fourth quarter. Brent futures rose 50 cents, or 0.6%, to $86.50 per barrel and U.S. West Texas Intermediate (WTI) crude gained 64 cents, or 0.8%, to $83.55 a barrel at 0345 GMT. Brent is set for a weekly gain of 2.3%, while WTI is set to climb 0.9% for the week, after both contracts surged on Monday on the potential for disruptions to Middle Eastern exports after Hamas’ attack on Israel over the weekend threatened a possible wider conflict. Prices gave back some of those gains during week. But, on Thursday, the U.S. imposed the first sanctions on owners of tankers carrying Russian oil priced above the G7’s price cap of $60 a barrel, to close loopholes in the mechanism designed to punish Moscow for its invasion of Ukraine. Russia is the world’s second-largest oil producer and a major exporter and the tighter U.S. scrutiny of its shipments could curtail supply. Also on Thursday, the Organization of the Petroleum Exporting Countries (OPEC) kept its forecast for growth in global oil demand, citing signs of a resilient world economy so far this year and expected further demand gains in China, the world’s biggest oil importer. “Supply side issues remained the focus in the crude oil market,” Daniel Hynes, senior commodity strategist at ANZ, said in a note on Friday, adding that prices during early trade on Friday rose on the stronger U.S. sanctions enforcement. “Sentiment was also boosted after OPEC said it expects crude stockpiles to slump by 3 (million barrels per day) this quarter. That assumes that there are no further supply disruptions emanating from the Israel-Hamas war,” Hynes said. Oil prices shrugged off data released on Friday showing a month-on-month decline in Chinese crude imports. Imports last month were 45.74 million metric tons, or 11.13 million barrels per day, down 10.5% from the August level, which was the third-highest on record. However, September imports were up 14% from a year earlier, continuing the trend seen through 2023, in which imports have significantly exceeded 2022 levels when China’s economy was hammered by widespread pandemic restrictions. Read Next Tropical Storm Sean slightly strengthens, says US hurricane center Tropical Storm Sean slightly strengthened on Thursday, about 1,590 miles (2,560 km) east of the Northern Leeward Islands, the U.S. National Hurricane Center (NHC) said. Reporting by Katya Golubkova in Tokyo and Andrew Hayley in Beijing; Editing by Christian Schmollinger Our Standards: The Thomson Reuters Trust Principles. Read Next Business Tropical Storm Sean slightly strengthens, says US hurricane center Tropical Storm Sean slightly strengthened on Thursday, about 1,590 miles (2,560 km) east of the Northern Leeward Islands, the U.S. National Hurricane Center (NHC) said.
Related Knowledge Center: ENERGY BASICS: petroleum
While electric-powered vehicles may be the ride of the future, oil remains at least for now the dominant fuel for transportation around the world. And after a period of time at the end of the 20th century when oil was subject to wide fluctuations in price, new supplies in North America as a result of non-conventional recovery techniques have helped stabilize prices.
Related Knowledge Center: Energy security and pricing
The United States achieved net energy independence in 2020, but that has not insulated the nation from the roiling of energy markets in the wake of the Russian invasion of Ukraine. Europe has been a large consumer of Russian natural gas, and the effort to wean itself, with the help of the United States, has strained markets and endangered global efforts to address the climate crisis.