Oil rises as the market considers supply worries from Iran and Russia; dealmaking for Venezuela is prioritized
Growing supply concerns associated with escalating demonstrations in oil-producing Iran and an increase in strikes in Russia’s war in Ukraine caused oil prices to rise 2% on Friday.
While U.S. West Texas Intermediate (WTI) crude was up $1.36, or 2.35%, to $59.12, Brent futures closed $1.35, or 2.18%, higher at $63.34 per barrel.
After declining for two days in a row, both benchmarks increased by more than 3% on Thursday. WTI gained roughly 3% for the week, while Brent increased roughly 4%.
“The Iranian uprising is keeping the market on edge,” stated Price Futures Group senior analyst Phil Flynn.
As the civil turmoil in the Middle Eastern nation worsened, concerns about possible delays to Iran’s oil production increased. “Iran protests seem to be gathering momentum, leading the market to worry about disruptions,” stated Ole Hansen, head of commodity analysis at Saxo Bank.
Iran reported a statewide internet blackout Thursday as demonstrations over economic problems persisted in the country’s capital, Tehran, as well as in the important cities of Mashhad and Isfahan.
According to a study, the Organization of the Petroleum Exporting Countries pumped 28.40 million barrels per day last month, which was 100,000 barrels per day less than the revised total from November. The biggest drops were reported by Iran and Venezuela.
Supply concerns were further compounded by worry about the expansion of the conflict between Russia and Ukraine.
The Russian military claimed to have launched its Oreshnik hypersonic missile at Ukrainian targets on Friday. According to a statement from the Russian defense ministry, among the targets were energy infrastructure that supports Ukraine’s military-industrial complex.
However, oversupply is still the primary factor that could limit increases, according to Haitong Futures, as global oil stockpiles continue to rise. The recovery is probably going to be small and difficult to maintain until the threats surrounding Iran increase.
On Friday afternoon, the White House was scheduled to meet with trading houses and oil corporations to arrange export agreements from Venezuela.
Following Washington’s abduction of Venezuelan leader Nicolas Maduro on Saturday, U.S. President Donald Trump has requested that Venezuela grant the United States full access to its oil sector. Officials from the Trump administration have stated that the United States will maintain perpetual control over Venezuela’s oil sales and earnings.
“The market will focus on the outcome in the coming days for how the Venezuelan oil in storage will be sold and delivered,” stated Tina Teng, market strategist at Moomoo ANZ. Oil giant Chevron Corp (CVX.N), international trading houses Vitol and Trafigura, and other companies are vying for U.S. government deals to market up to 50 million barrels of oil that state-run oil company PDVSA has accumulated in inventories amid a harsh oil embargo.
An early predictor of future production, the number of oil and gas rigs in the United States dropped two to 544 this week, the lowest since mid-December, according to a new tab released by energy services company Baker Hughes (BKR.O) on Friday.
