Cayman Islands, Caribbeanand International News
Sunday, Apr 14, 2024

Oil marches higher with sights on $114 a barrel

Oil marches higher with sights on $114 a barrel

Russia invaded Ukraine and the West responded with numerous sanctions designed to hammer Russia’s economy.
Oil relentlessly marched higher beyond $110 a barrel on Wednesday, responding to a flood of divestment from Russian oil assets by major companies and expectations that the market will remain short on supply for months to come.

The market’s surge has been dramatic, with global benchmark Brent crude gaining 11 percent this week alone after Russia invaded Ukraine and the West responded with numerous sanctions designed to hammer Russia’s economy.

While the energy sector was not specifically targeted, the sanctions, which have targeted financial transactions and banks, have hampered exporting capabilities from Russia, which ships 4 million to 5 million barrels of oil worldwide every day, more than any nation except Saudi Arabia.

“The sanctions on individuals and financial institutions have led the oil industry and other government entities to a de facto ban on Russian oil purchases,” said Andrew Lipow, president of Lipow Oil Associates in Houston, Texas in the United States.

Global benchmarks were off earlier highs after Brent hit its highest level since 2014 while US crude surged to a peak not seen since 2011.

Brent crude futures peaked at $113.94 a barrel before easing to $110.58 by 1:07pm EST (17:07 GMT), up $5.61 or 5.3 percent. US West Texas Intermediate (WTI) crude futures hit a high of $112.51 a barrel, and were last up $5.05, or 4.9 percent, to $108.46.

Both benchmarks pulled back after US Federal Reserve Chair Jerome Powell said the US central bank would boost interest rates several times to quell inflation.

“Demand destruction – through still higher prices – is now likely the only sufficient rebalancing mechanism,” said Goldman Sachs analysts in a note.

Relief in the form of more supply is unlikely in the near term. The Organization of the Petroleum Exporting Countries and allies – which include Russia – stuck to its long-term plan to boost output by just 400,000 barrels per day (bpd) at a brief meeting on Wednesday.

Even as OPEC+ has increased output for the last several months, producers are routinely falling short of their targets, widening a gap that can only be filled by dipping into stockpiles.

Current worldwide demand has roughly reached levels last seen before the coronavirus pandemic, and there is inadequate supply, causing large countries to dip into their stockpiles to make up for the shortfall.

Refiners and other buyers of oil are scrambling. Prominent grades of crude oil traded worldwide, such as those in the North Sea and the Middle East, are at record premiums above Brent.

At the same time, the key Russian Urals grade is being discounted at $18 lower than the benchmark – and prospective sellers are still finding little interest in Russian oil. On Wednesday, Russia’s Surgutneftegas was unable to sell 880,000 tonnes of Urals oil from Russian ports, following cancellations of other proposed sales.

Adding fuel to the fire, the White House on Wednesday said it was “very open” to the possibility of targeting Russian oil and gas with sanctions. That could drive prices even higher, analysts said, until consumers start to balk at the rising costs.

However, National Economic Council Deputy Director Bharat Ramamurti later on Wednesday said the US administration does not want to target the Russian energy sector for now.

Russian oil exports account for about 8 percent of global supply.

Trade in Russian oil was already in disarray as producers postponed sales, importers rejected Russian ships and buyers worldwide searched elsewhere for crude while Western sanctions and pullouts by private companies squeezed Russia.

Numerous global oil majors announced plans to divest of their Russian investments, including ExxonMobil, BP and Shell. On Wednesday, merchant trader Trafigura said it had frozen its investments in Russia, one day after Exxon said it would exit Russian oil-and-gas operations.

US oil inventories continued to decline, meanwhile. The key Cushing, Oklahoma crude hub’s tanks are at their lowest since 2018, while the US strategic reserves dropped to a near 20-year low – and that was before another release announced by the White House on Tuesday in tandem with other industrialised nations.

That release of 60 million barrels of oil agreed on Tuesday by International Energy Agency member countries failed to reassure the market, as prices rose after the announcement.

“Given the 100 million bpd oil demand market, 60 million barrels satiates slightly over half a day of demand … and barely gets the market past lunchtime,” wrote RBC Capital Markets analyst Michael Tran.

Related Articles

Paper straws found to contain long-lasting and potentially toxic chemicals - study
FTX's Bankman-Fried headed for jail after judge revokes bail
Blackrock gets half a trillion dollar deal to rebuild Ukraine
Israel: Unprecedented Civil Disobedience Looms as IDF Reservists Protest Judiciary Reform
America's First New Nuclear Reactor in Nearly Seven Years Begins Operations
Southeast Asia moves closer to economic unity with new regional payments system
Today Hunter Biden’s best friend and business associate, Devon Archer, testified that Joe Biden met in Georgetown with Russian Moscow Mayor's Wife Yelena Baturina who later paid Hunter Biden $3.5 million in so called “consulting fees”
Singapore Carries Out First Execution of a Woman in Two Decades Amid Capital Punishment Debate
Google testing journalism AI. We are doing it already 2 years, and without Google biased propoganda and manipulated censorship
Unlike illegal imigrants coming by boats - US Citizens Will Need Visa To Travel To Europe in 2024
Musk announces Twitter name and logo change to X.com
The politician and the journalist lost control and started fighting on live broadcast.
The future of sports
Unveiling the Black Hole: The Mysterious Fate of EU's Aid to Ukraine
Farewell to a Music Titan: Tony Bennett, Renowned Jazz and Pop Vocalist, Passes Away at 96
Alarming Behavior Among Florida's Sharks Raises Concerns Over Possible Cocaine Exposure
Transgender Exclusion in Miss Italy Stirs Controversy Amidst Changing Global Beauty Pageant Landscape
Joe Biden admitted, in his own words, that he delivered what he promised in exchange for the $10 million bribe he received from the Ukraine Oil Company.
TikTok Takes On Spotify And Apple, Launches Own Music Service
Global Trend: Using Anti-Fake News Laws as Censorship Tools - A Deep Dive into Tunisia's Scenario
Arresting Putin During South African Visit Would Equate to War Declaration, Asserts President Ramaphosa
Hacktivist Collective Anonymous Launches 'Project Disclosure' to Unearth Information on UFOs and ETIs
Typo sends millions of US military emails to Russian ally Mali
Server Arrested For Theft After Refusing To Pay A Table's $100 Restaurant Bill When They Dined & Dashed
The Changing Face of Europe: How Mass Migration is Reshaping the Political Landscape
China Urges EU to Clarify Strategic Partnership Amid Trade Tensions
Europe is boiling: Extreme Weather Conditions Prevail Across the Continent
The Last Pour: Anchor Brewing, America's Pioneer Craft Brewer, Closes After 127 Years
Democracy not: EU's Digital Commissioner Considers Shutting Down Social Media Platforms Amid Social Unrest
Sarah Silverman and Renowned Authors Lodge Copyright Infringement Case Against OpenAI and Meta
Italian Court's Controversial Ruling on Sexual Harassment Ignites Uproar
Why Do Tech Executives Support Kennedy Jr.?
The New York Times Announces Closure of its Sports Section in Favor of The Athletic
BBC Anchor Huw Edwards Hospitalized Amid Child Sex Abuse Allegations, Family Confirms
Florida Attorney General requests Meta CEO's testimony on company's platforms' alleged facilitation of illicit activities
The Distorted Mirror of actual approval ratings: Examining the True Threat to Democracy Beyond the Persona of Putin
40,000 child slaves in Congo are forced to work in cobalt mines so we can drive electric cars.
BBC Personalities Rebuke Accusations Amidst Scandal Involving Teen Exploitation
A Swift Disappointment: Why Is Taylor Swift Bypassing Canada on Her Global Tour?
Historic Moment: Edgars Rinkevics, EU's First Openly Gay Head of State, Takes Office as Latvia's President
Bye bye democracy, human rights, freedom: French Cops Can Now Secretly Activate Phone Cameras, Microphones And GPS To Spy On Citizens
The Poor Man With Money, Mark Zuckerberg, Unveils Twitter Replica with Heavy-Handed Censorship: A New Low in Innovation?
Unilever Plummets in a $2.5 Billion Free Fall, to begin with: A Reckoning for Misuse of Corporate Power Against National Interest
Beyond the Blame Game: The Need for Nuanced Perspectives on America's Complex Reality
Twitter Targets Meta: A Tangle of Trade Secrets and Copycat Culture
The Double-Edged Sword of AI: AI is linked to layoffs in industry that created it
US Sanctions on China's Chip Industry Backfire, Prompting Self-Inflicted Blowback
Meta Copy Twitter with New App, Threads
The New French Revolution
BlackRock Bitcoin ETF Application Refiled, Naming Coinbase as ‘Surveillance-Sharing’ Partner