Oil Prices Surge Amid Rising Global Tensions and Supply Squeeze

Oil prices are soaring due to global tensions and supply issues. Stay updated on the latest energy market trends.

Apr 4, 2024 - 22:06
Apr 4, 2024 - 22:07
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Oil Prices Surge Amid Rising Global Tensions and Supply Squeeze
Oil Prices Surge Amid Rising Global Tensions and Supply Squeeze

Oil prices are on track to secure a second consecutive weekly gain, buoyed by escalating geopolitical tensions in Europe and the Middle East, coupled with mounting concerns over tightening global supply and robust fuel demand amidst economic recoveries worldwide.

On Friday, Brent crude rose by 49 cents to $91.14 a barrel, while U.S. West Texas Intermediate crude increased by 37 cents to $86.96 a barrel. Both benchmarks settled at their highest levels since October during Thursday's trading session.

Analysts at ANZ bank, Daniel Hynes and Soni Kumari, anticipate further upward momentum in oil prices in the near term, citing a favorable economic landscape, ongoing supply constraints, and heightened geopolitical risks. ANZ has raised its 3-month price target for Brent to $95 a barrel.

The tensions between Israel and Iran, following an attack on Iran's embassy compound in Syria, have fueled concerns of retaliatory actions, contributing to the upward pressure on oil prices. Additionally, Ukrainian drone strikes targeting Russian refineries have reportedly disrupted over 15% of Russian fuel output, exacerbating supply constraints.

Despite calls for increased compliance with output cuts from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, including Russia (OPEC+), the supply policy remains unchanged. ANZ analysts anticipate further declines in output during the second quarter, potentially leading to a drawdown in inventories.

Moreover, a reduction in heavy oil supply globally, driven by export cuts from Mexico and the United Arab Emirates, has further tightened the market. This tightening comes amidst robust global oil demand growth of 1.4 million barrels per day in the first quarter, as highlighted by JP Morgan analysts.

Investors are eagerly awaiting the release of the U.S. March employment report later on Friday, which could offer additional insights into the economic outlook and the trajectory of monetary policy in the United States.

Also Read: Oil Prices Approach $90 as OPEC+ Maintains Cuts and US Inventory Awaited

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