The Organization of the Petroleum Exporting Countries pumped 28.4 million barrels per day last month
[NEW YORK] Oil prices rose 2 per cent on Friday (Jan 9) on growing supply worries linked to intensifying protests in oil-producing Iran and an escalation of attacks in Russia’s war in Ukraine.
Brent futures settled US$1.35, or 2.18 per cent, higher to US$63.34 per barrel, while US West Texas Intermediate (WTI) crude was up US$1.36, or 2.35 per cent, to US$59.12. Both benchmarks climbed more than 3 per cent on Thursday, following two straight days of declines. For the week, Brent rose about 4 per cent, while WTI gained about 3 per cent.
“The uprising in Iran is keeping the market on edge,” said Phil Flynn, senior analyst with the Price Futures Group. Worries over the potential disruption of Iran’s oil output grew as the civil unrest in the Middle Eastern country intensified.
“Iran protests seem to be gathering momentum, leading the market to worry about disruptions,” said Ole Hansen, head of commodity analysis at Saxo Bank. A nationwide Internet blackout was reported in Iran on Thursday as protests over economic hardships continued in the capital Tehran, the major cities of Mashhad and Isfahan, as well as other areas around the country.
The Organization of the Petroleum Exporting Countries pumped 28.4 million barrels per day last month, down 100,000 bpd from November’s revised total, a survey showed, with Iran and Venezuela posting the largest declines.
Concerns about the spread of the Russia-Ukraine war also added to supply worries. The Russian military said on Friday it had fired its hypersonic Oreshnik missile at targets in Ukraine. The targets included energy infrastructure supporting Ukraine’s military-industrial complex, the Russian defense ministry said in a statement.
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Still, global oil inventories are rising, and oversupply remains the main driver that could cap gains, Haitong Futures said. Unless risks around Iran escalate, the rebound is likely limited and hard to sustain.
Meanwhile, the White House was set to meet with oil companies and trading houses on Friday afternoon to discuss Venezuelan export deals.
US President Donald Trump has demanded that Venezuela give the US full access to its oil sector following Washington’s capture of the country’s leader Nicolas Maduro on Saturday. Trump administration officials have said the US will control Venezuelan oil sales and revenue indefinitely.
Oil major Chevron, global trading houses Vitol and Trafigura, and other firms are competing for US government deals to market up to 50 million barrels of oil that state-run oil company PDVSA has accumulated in inventories amid a severe oil embargo.
“The market will focus on the outcome in the coming days for how the Venezuelan oil in storage will be sold and delivered,” said Tina Teng, market strategist at Moomoo ANZ.
US oil and gas rig count, an early indicator of future output, fell by two to 544 this week, the lowest since mid-December, energy services firm Baker Hughes said in its closely followed report on Friday. REUTERS
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