RIYADH: Oil prices jumped by more than 3 percent on Wednesday on supply tightness and the growing prospect of new Western sanctions against Russia even as Moscow and Kyiv held peace talks.
Brent crude futures were up $3.07, or 2.79 percent, at $113.30 by 1215 GMT, reversing a 2 percent loss in the previous session.
US West Texas Intermediate crude futures rose $3.20, or 3.07 percent, to $107.44 a barrel, erasing a 1.6 percent drop on Tuesday.
OPEC chief encourages OPEC+ to stay the course, remain vigilant
OPEC Secretary-General Mohammad Barkindo said OPEC+ participants should “stay the course” regarding the group’s decisions, ahead of an OPEC+ meeting on Thursday where the group is expected to stick to its existing deal of gradual output increases.
Barkindo said that OPEC+ members should remain “vigilant and attentive to ever-changing market conditions,” according to an OPEC statement.
OPEC+ will likely stick to plans for a modest increase in oil output in May, several sources close to the talks told Reuters, despite a surge in prices due to the Ukraine crisis and calls from the United States and others for more supply.
“We urge global leaders to ... once again ensure an unhindered, stable and secure flow of energy to the whole world,” Barkindo said in reference to recent market developments.
Key oil producers spare Russia; aim to stabilize market
Keeping the market tight, major oil producers are unlikely to boost output above their agreed 400,000 barrels per day when the Organization of the Petroleum Exporting Countries and allies including Russia, together called OPEC+, meet on Thursday, several sources close to the group said.
Saudi Arabia and the United Arab Emirates, key members of OPEC+, said the group would not look to take action against Russia for its invasion of Ukraine, saying the group’s aim was only to stabilize the market and not to engage in politics.
Covid impact: Oil demand reduces in China
However, oil prices face the pressure of weakening demand from China owing to tightened mobility restrictions and lockdowns in multiple cities. The country’s financial hub of Shanghai extended its shutdown earlier than scheduled after recording nearly 6,000 new local cases.
“Gasoline and diesel wholesalers in eastern China see stocks piling up with very little demand from consumers, and operational rates at state-owned refiners are dropping significantly,” said a China-based oil trader.
(With inputs from Reuters)
