As crude’s blistering rally continues, U.S. oil exceeded $111 per barrel in Wednesday’s trading and Brent topped $110 per barrel.
Ahead of OPEC and its oil-producing allies, which include Russia, meeting Wednesday to discuss April’s production, oil prices advanced.
Crude oil prices rose 6.09% to $111.36 per barrel on Wednesday. Early this Morning, Brent briefly rose to $111.78 per barrel, a level not seen since Jan. 2013. A barrel of oil settled at $104.97 on Tuesday, up 7.15% from the previous session.
Consequently, an offer for Russian crude oil’s flagship, the Urals had no takers, one of the latest indications that the country’s west coast is grinding to a halt. About 70% of Russian crude trade is currently frozen due to banking sanctions, soaring freight rates, and broader political risks, according to Energy Aspects.
After the economies had recouped strongly from the pandemic, the world oil market had already tightened significantly. There is the potential for crude prices to rise even further as a result of the disruption to Russian exports.
In an already tight market, WTI and Brent spiked above $100 for the first time since 2014 last Thursday after Russia invaded Ukraine.
It’s going to be difficult for crude prices to stay down, as the war in Ukraine will likely put further strain on supplies in a very tight oil market. If the oil market thinks that sanctions will be placed on Russian energy, Brent crude could surge to the $120 level.
Members of the International Energy Agency announced Tuesday they would make available 60 million barrels of oil in an effort to ease the upward march of oil prices. 30 million barrels will be released as part of that. Markets were not calmed by the announcement.
As the demand for oil recovers and supplies remain constrained, WTI and Brent are both up more than 40% year to date.
In April 2020, OPEC and its allies implemented an unprecedented cut of nearly 10 million barrels per day, bringing production under control and gradually returning barrels to the market.
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