Oil prices extended gains yesterday, as investors mulled supply risks stemming from Ukrainian attacks on Russian refineries and the potential for escalation in the Middle East conflict, while Opec+ ministers made no changes to current output cuts in a meeting.
Brent crude futures for June rose 75 cents, or 0.84%, to $89.67 (R1703) per barrel at 1.30pm, while US West Texas Intermediate crude futures for May gained 73 cents, or 0.86%, to $85.88 a barrel.
Opec+ ministers made no fresh policy recommendations in a meeting yesterday, two sources said, after the group last month decided to extend production cuts until June.
Oil futures compounded Tuesday’s gains, when Brent and WTI climbed 1.7% to their highest since October.
Prices jumped higher on Tuesday after a fresh round of Ukrainian drone attacks on Russian refineries threatened to take even more of the country’s processing capacity off-line.
Investors were also concerned that conflict in the Middle East could spread, after Iran vowed revenge against Israel for an attack on Monday that killed high-ranking military personnel.
A wider conflict in the Middle East involving more oil-producing nations could cause supply disruptions. Iran, which provides support for the Hamas militia fighting Israel in Gaza, is the third-largest producer in the Organization of the Petroleum Exporting Countries (Opec).
“The rise in hostilities in both hot spots pushed the price of the two crude oil futures contracts to their highest levels this year,” PVM analyst Tamas Varga said of Tuesday’s rise.
Bank of America Global Research raised its 2024 Brent and WTI forecasts to $86 and $81 a barrel respectively, it said in a note yesterday, on firming demand and escalating political tension.
“Geopolitical turmoil has also boosted oil demand via longer trade routes and impacted supply by reducing refining capacity via attacks on Russian energy infrastructure,” the bank said.
BUSINESS REPORT