Oil prices rise on concerns of lower supply and signs of stronger economic growth in the US
In the bustling city of London, oil prices surged on Thursday as major producers continued to implement output cuts, leading to concerns of lower supply. Additionally, signs of stronger economic growth in the US, the world’s biggest oil consumer, contributed to the price hike, as reported by Reuters.
Supply concerns drive oil prices up
The price of Brent futures for June experienced a 0.4 percent increase, reaching $89.66 a barrel at 7:43 a.m. Saudi time. Similarly, US West Texas Intermediate futures for May saw a rise of 0.4 percent, reaching $85.73 a barrel.
OPEC+ maintains output cuts
A recent meeting of top ministers from the Organization of Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), decided to keep the oil supply policy unchanged. The group also urged some countries to enhance compliance with output cuts, with plans for certain members to compensate for oversupply in the first quarter.
Positive outlook on oil prices
Analysts at ING noted that oil prices continued their upward trajectory following the meeting, which recommended no changes to the OPEC+ output policy. Both the June Brent contract and the May WTI contract have seen increases for four consecutive days, closing on Wednesday at their highest levels since the end of October.
Global tensions impact oil prices
Recent geopolitical events, such as Ukrainian attacks on Russian refineries and concerns about the Israel-Hamas conflict potentially involving Iran, have also influenced oil prices. Iran, the third-largest producer in OPEC, has vowed revenge against Israel for a recent attack that resulted in the death of high-ranking Iranian military personnel.
Market reassurance amidst tensions
Despite the ongoing geopolitical tensions, analysts at ANZ mentioned that the OPEC+ decision provided assurance that recent events in the Middle East have not significantly altered the group’s perspective on the market.